US stocks fall sharply after US inflation hits 40-year high
• The Nasdaq Composite slipped 40.38 points, or 0.3%, closing at 13,371.57
• The 10-year Treasury yield fell more than 6 basis points to 2.717%
US stocks ended lower on Tuesday, erasing previous gains, after the latest U.S. inflation data showed a sharp increase in prices for March.
The Dow Jones Industrial Average fell by 87.72 points, or 0.3%, to close at 34,220.36, after rising as much as 362 points, or 1.05%, in earlier activity.
The S&P 500 dropped 5.08 points, or 0.3%, to finish at 4,397.45, giving up an earlier gain of as much as 1.3%. The Nasdaq Composite slipped 40.38 points, or 0.3%, to end at 13,371.57, after rising 2.04% at its session high.
On Tuesday, the Labor Department said that its consumer price index (CPI) jumped 8.5% in March, compared to a year earlier, the biggest year-over-year increase since December 1981.
Read more: US inflation rose 8.5% in March fueled by high gas prices, highest since 1981
Costs for food, fuel, housing, and other necessities wiped out any pay raises that Americans have received.
The 10-year Treasury yield fell from a three-year high following the report as traders hoped the core reading could mean inflation is showing signs of peaking.
The benchmark note fell more than 6 basis points to 2.717% following the CPI report after earlier reaching 2.82%. Yields and debt prices move opposite each other.
The surge in yields has made stocks less attractive on a relative basis, weighing in particular on technology and growth shares whose valuations are based on earnings and cash flow far into the future.
Microsoft (NASDAQ: MSFT) and Nvidia ( NASDAQ: NVDA), both dropped lower, falling 1% and 2%, respectively.
The international benchmark Brent crude jumped 6% to $104.60 per barrel, while the West Texas Intermediate crude futures rose 6.7% to $100.66 per barrel.
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