Stocks pulled back again on Wall Street Wednesday after a surprisingly big jump in inflation last month worsened worries among investors that the economy may run too hot as it bounces back from its pandemic-induced recession. Tech giants, which had soared during the past year of lockdowns, took some of the biggest losses. The slump put major indexes on track for their worst weekly losses since October, the AP reports. Bond yields snapped higher after the government reported that consumer prices rose in April at the fastest year-over-year rate since 2008. The S&P 500 fell 89.06 points, or 2.1%, to 4,063.04. The Dow Jones Industrial Average fell 681.50, or 2%, to 33,587.66. The Nasdaq fell 357.75 points, or 2.7%, to 13,031.68.
The yield on the 10-year Treasury note rose to 1.69% from 1.62% a day earlier, a big move. Bond yields rise when investors fear that an increase in inflation will erode the future value of the income that bonds pay. Investors have been worrying that inflation could return after being absent for many years as the economy revs out of the recession brought on by the pandemic. Federal Reserve officials and other economists have said moderate inflation may actually be a good thing in a recovery. But rising inflation makes stocks seem more expensive, particularly high-value tech stocks that trade on the potential for their future profits in coming years. Apple, Microsoft, Facebook, and Amazon were all down nearly 2% or more.
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