(For a Reuters live blog on U.S., UK and European stock
markets, click LIVE/ or type LIVE/ in a news window.)
* U.S. consumer prices jump most since June 2009
* Megacap growth stocks weigh heaviest
* Energy shares gain as crude climbs
* Indexes down: Dow 1.99%, S&P 2.14%, Nasdaq 2.67%
(Updates with closing prices)
By Stephen Culp
NEW YORK, May 12 (Reuters) - Wall Street closed lower on
Wednesday with the S&P suffering its biggest one-day percentage
drop since February, as inflation data fueled concerns over
whether interest rate hikes from the Fed could happen sooner
than anticipated.
All three major U.S. stock indexes ended the session deep in
the red following the Labor Department's April consumer prices
report, which showed the biggest rise in nearly 12 years.
The report was hotly anticipated by market participants who
have grown increasingly worried over whether current price jumps
will defy the U.S. Federal Reserve's reassurances by morphing
into long-term inflation.
But pent-up demand from consumers flush with stimulus and
savings is colliding with a supply drought, sending commodity
prices spiking, while a labor shortage drives wages higher.
"The topic on everyone's mind is obviously inflation," said
Matthew Keator, managing partner in the Keator Group, a wealth
management firm in Lenox, Massachusetts. "It's something the
(Fed) has been looking for and they're finally getting their
wish."
"The question is how long will its fires run hot before
starting to simmer?"
That concern is shared by Stuart Cole, head macro economist
at Equiti Capital in London.
"Going forward, the big question is just how long can the
Fed maintain its dovish stance in opposition to the markets,"
Cole said. "Particularly if companies begin raising wages to
encourage unemployed labor back into the workforce, in turn
driving a large hole in the Fed's transitory inflation
argument."
Core consumer prices (CPI), which exclude volatile food and
energy items, grew at 3% year-on-year, shooting above the
central bank's average annual 2% inflation growth target.
(Graphic on inflation) https://tmsnrt.rs/3we4MO7
The Dow Jones Industrial Average .DJI fell 681.5 points,
or 1.99%, to 33,587.66, the S&P 500 .SPX lost 89.06 points, or
2.14%, to 4,063.04 and the Nasdaq Composite .IXIC dropped
357.75 points, or 2.67%, to 13,031.68.
Of the 11 major sectors in the S&P 500, 10 closed in
negative territory, with consumer discretionary .SPLRCD down
most.
Energy .SPNY was the sole gainer, advancing 0.1%, boosted
by rising crude prices CLc1 . O/R
Market-leading mega-caps, including Amazon.com Inc AMZN.O ,
Apple Inc AAPL.O , Alphabet Inc GOOGL.O , Microsoft Corp
MSFT.O and Tesla Inc TSLA.O , fell between 2% and 3% as
investors shied away from what many feel are stretched
valuations.
"The CPI number being stronger than expected has led to
further weakness in tech stocks," said Michael James, managing
director of equity trading at Wedbush Securities in Los Angeles.
"Tech investors are concerned that higher rates are going to
lead to multiple compression and less attractive valuations for
tech names in a higher rate environment."
The CBOE Volatility index .VIX , a gauge of market anxiety,
close at 27.64, its highest level since March 4.
Online dating platform Bumble Inc BMBL.O gained in
after-hours trading after posting quarterly results.
First-quarter earnings season is on the wane, with 456
constituents of the S&P 500 having reported. Of those, 86.8%
have beaten consensus estimates, according to Refinitiv IBES.
Declining issues outnumbered advancing ones on the NYSE by a
6.05-to-1 ratio; on Nasdaq, a 3.84-to-1 ratio favored decliners.
The S&P 500 posted nine new 52-week highs and no new lows;
the Nasdaq Composite recorded 34 new highs and 118 new lows.
Volume on U.S. exchanges was 11.82 billion shares, compared
with the 10.44 billion average over the last 20 trading days.
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GRAPHIC-U.S. inflation gauges https://tmsnrt.rs/3we4MO7
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