Stocks closed lower on
The S&P 500 lost 0.9%, with most of the pullback coming in the last hour of trading.
Banks, industrial and communication companies also helped drag the market lower, easily outweighing small gains by health care stocks, among others. Energy companies fell the most as the price of
Investors continued to size up the latest batch of company earnings reports, including quarterly snapshots from
"Stocks appear to be in consolidation mode, digesting strong year-to-date gains on the heels of a superb first-quarter reporting period," said
The S&P 500 lost 35.46 points to 4,127.83. The Dow Jones Industrial Average fell 267.13 points, or 0.8%, to 34,060.66. The tech-heavy Nasdaq dropped 75.41 points, or 0.6%, to 13,303.64. The Russell 2000 index of small company stocks gave up 16.24 points, or 0.7%, to 2,210.88. Each of the indexes had been up at some point in the early going.
The broader market made solid gains early in the year as investors bet on an economic recovery fueled by widespread vaccinations. Expectations were high for corporate earnings and the latest round of results has been surprisingly good.
"Some sort of pause was always inevitable," said
Investors have been worried about whether rising inflation will prove to be either temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.
The fear is that the
"I don't think we're entering a new period of structurally higher inflation, but at the same time its impossible to say it's not one of the main risks investors face," Mayfield said.
Higher interest rates drag on most of the stock market, but they are particularly painful for stocks considered the most expensive and those bid up for profits expected far into the future. This mostly involves technology stocks, which rose sharply last year and are valued highly on the future profits those companies could bring in.
Investors have been able to draw encouragement from company earnings reports, which have been surprisingly good.
"By most metrics you're seeing company financials reflect an economy that's starting to open up and that's consistent with economic growth," Sandven said.
Retailers are among the last companies to report first-quarter results, with several of them set to do so this week, including Target and