Wall Street opens lower led by more drops in Big Tech stocks

Tuesday, May 11, 2021 | The Associated Press


A man walks past a bank's electronic board showing the Hong Kong share index at Hong Kong Stock Exchange Tuesday, May 11, 2021. Shares dropped Tuesday in Asia after selling of several Big Tech companies pulled U.S. benchmarks lower. (AP Photo/Vincent Yu)

Stocks were falling moderately on Tuesday as big technology stocks continued on a two-day slide. Inflation remains a growing concern among investors, which would be a major drag on the overall market if allowed to accelerate.

The S&P 500 index fell 0.7% as of 10 a.m. Eastern. The Dow Jones Industrial Average fell 0.8% and the technology-heavy Nasdaq Composite was down 1%.

Big technology companies were dragging down the market in the early going. Apple fell 2%, extending its loss from the day before. Facebook, Cisco Systems, Microsoft and Google were also all down roughly 1% or more.

Tech stocks have gotten hit in recent days as concerns about inflation impact the overall stock market. Commodity prices have risen, particularly for industrial metals such as copper and platinum, as well as for energy commodities like gasoline and crude oil. Tech stocks, which get most of their valuation from the future profits those companies are likely to earn, become less valuable if inflation decreases the value of those earnings.

Inflation has been a concern for investors since bond yields spiked earlier this year, but yields have mostly stabilized since then. The yield on the 10-year Treasury was steady at 1.61%. Despite reassurances from the Federal Reserve and a much weaker-than-expected U.S. jobs reading last week, investors have refocused on the potential for surging prices to pressure central banks into tapering off on their massive stimulus and ultra-low interest rates, analysts said.

Rising commodity prices have begun to push prices of some consumer products higher but analysts expect increases to be mild and tied to the growing economy, even as the jobs market lags behind. Consumer confidence and retail sales are regaining ground as people get vaccinated and businesses reopen.

Signals of inflation have popped up in other markets. China reported its strongest increase in producer prices since October 2017 last month, as supply constraints cascaded into manufacturing.

Meanwhile, the most recent round of corporate earnings reports showed a broad recovery touching many different sectors and industries during the the first three months of the year. Much of that was anticipated ahead of the reports and investors are now far off from the next big round of results.

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