By Yasin Ebrahim
Investing.com -- The Dow plunged to fresh lows for the year Wednesday as an ugly reversal in tech fueled a broader selloff after data showing inflation remains near 40-year highs stoked fears of more aggressive Federal Reserve rate hikes.
The Dow Jones Industrial Average slipped 1.1%, or 342 points, the S&P 500 fell 1.7%, and the Nasdaq fell 2.3%.
The Labor Department said Wednesday its consumer price index slowed to 0.3% last month from 1.2% previously, exceeding forecasts for a slowdown to a 0.2% rise. Consumer prices in April year-on-year slowed to 8.3% from 8.5%.
Ahead of the report, many economists were expecting that inflation was nearing a peak, but the latest reading is likely to persuade the Federal Reserve to lean more hawkish on monetary policy.
“Powell said last week that the Fed wasn't seriously considering a 75bp increase at the next two meetings. After today's CPI report, it may warrant some consideration,” Jefferies said in a note.
"The Fed is walking this fine line between pushing the economy into recession, and pushing down inflation," Melissa Brown, managing director of applied research at Qontigo, an index and analytics provider, said in an interview with Investing.com on Wednesday. "I think that that line has gotten finer."
Against the backdrop of growing bets on a more aggressive Fed, big tech gave up their gains and resumed their selloff.
Apple (NASDAQ:AAPL) fell 5%, a move that saw the tech giant relinquish its crown as the most valuable company to Saudi Aramco (TADAWUL:2222).
Rising energy stocks, however, attempted to limit downside momentum in the broader market, underpinned by gains in the Occidental and a jump in oil prices on fresh supply fears. Ukraine suspended gas flows to Europe via a major transit point, located in the Donbass region, blaming Russian interference.
Occidental Petroleum (NYSE:OXY) gained more than 1% after reporting better-than-expected quarterly results as rising energy prices bolstered growth.
Coinbase Global (NASDAQ:COIN), meanwhile, reported first-quarter revenue that fell short of expectations as the rout in cryptocurrencies including bitcoin and lower market volatility weighed on growth. Its shares fell more than 26%.
There remain some on Wall Street who believe the long-term investment case for Coinbase is intact even as the cryptocurrency trading platform flagged slower growth in the coming quarters.
Oppenheimer cut its price target on the stock to $197 from $314, but pointed to positive fundamentals including ongoing crypto adoption and the company’s strong balance sheet that ensure the long-term investment case on Coinbase remains intact.
Unity Software (NYSE:U) delivered a softer growth outlook ahead and first-quarter results that fell short of Wall Street estimates, sending its shares tumbling 37%.
But there were some bright spots on the earnings front.
Krispy Kreme (NASDAQ:DNUT) reported quarterly results that beat on both the top and bottom lines, sending its shares climbed by more than 3% higher. Roblox (NYSE:RBLX), meanwhile, shrugged off softer first-quarter results to rise more than 3%.