US STOCKS-S&P closes down in broad sell-off fueled by inflation fears

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(Updates to market close)
By Stephen Culp
NEW YORK, May 11 (Reuters) - The S&P 500 closed lower on
Tuesday as rising commodity prices and labor shortages prompted
fears that despite reassurances from the U.S. Federal Reserve,
near-term price spikes could morph into longer-term inflation.
While all three indexes pared their losses from session
lows, the sell-off was fairly evenly dispersed across the
sectors.
"Today feels like a catch-up in that tech has been weak so
far this month and it's finally spilled over into other areas of
the market and we're seeing broader weakness," said Ryan
Detrick, senior market strategist at LPL Financial in Charlotte,
North Carolina.
Economic data released on Tuesday from the Labor Department
showed job openings at U.S. companies jumped to a record high in
March, further evidence of the labor shortage hinted by Friday's
disappointing employment report. The report suggests labor supply is not keeping up with
surging demand as employers scramble to find qualified workers.
Burrito chain Chipotle Mexican Grill CMG.N announced it
would hike the average hourly wage of its workers to $15, a
further sign that the worker shortage in the face of a demand
revival could add fuel to the inflation surge. That worker shortage, along with a supply drought in the
face of booming demand could contribute to what is seen as
inevitable prices spikes, which the U.S. Federal Reserve has
repeatedly said are unlikely to translate into long-term
inflation.
"The inflation concerns continue," Detrick said. "The supply
chain issues coupled with record stimulus coupled with
apparently a tighter labor market have all contributed to fears
that inflation could trend higher over the summer months."
"I don't think (the market) believes the Fed when it says
they won't raise rates until after 2023," Detrick added. "That
could be where the market and the Fed do not see eye to eye."
Market participants will scrutinize the Labor Department's
CPI report, due early Wednesday, for further signs of potential
inflationary pressures. (Graphic on inflation) https://tmsnrt.rs/2SxpkST
Unofficially, the Dow Jones Industrial Average .DJI fell
472.21 points, or 1.36%, to 34,270.61, the S&P 500 .SPX lost
36.33 points, or 0.87%, to 4,152.1 and the Nasdaq Composite
.IXIC dropped 12.43 points, or 0.09%, to 13,389.43.
The CBOE Volatility index .VIX , a measure of investor
anxiety, touched its highest level in two months.
First-quarter reporting season, which is providing the first
year-on-year comparison to pandemic-related shutdowns, is
approaching the finish line with 451 constituents of the S&P 500
having reported. Of those, 86.9% have beaten consensus
expectations, according to Refinitiv IBES.
Analysts now see first-quarter S&P earnings growth of 50.5%
year on year, up substantially from the 16% growth forecast at
the beginning of the year, per Refinitiv.
Boeing Co BA.N lost ground after the planemaker announced
deliveries of its 737 MAX fell to just four planes in April due
to an electrical problem. Tesla Inc TSLA.O continued its slide following the
electric automaker's decision to expand its Shanghai plant owing
to heightened U.S.-China tensions. Mall REIT Simon Property Group Inc SPG.N fell after the
company said it does not expect a return to 2019 occupancy
levels until next year or 2023. L Brands Inc LB.N announced it will split into two
publicly traded companies, Bath & Body Works and Victoria's
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GRAPHIC-U.S. inflation gauges https://tmsnrt.rs/2SxpkST
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