Dow ends more than 470 points lower, while Nasdaq nearly erases 2% fall as tech shares bounce

Read: ‘No doubt…that we are in a raging mania in all assets’, says Stanley Druckenmiller

Other sectors stumbled, including cyclical areas expected to benefit most from the economic recovery. The S&P 500 energy sector fell 2.4%, to lead the move to the downside, while industrials were off 1.6%.

Analysts expect a jump in consumer prices and supply shortages in goods like computer chips and some commodities as economies recover from the pandemic and pent-up demand is unleashed by households, businesses and entire industries.

“There seems to be modest concern over inflation as of late and that has been cited as the primary catalyst for recent weakness in global equities, said Brian Price, head of investment management for Commonwealth Financial Network.

Long-term U.S. bond yields have pushed back modestly to the upside, but remain off the highs seen in March, a move in line with a Federal Reserve committed to maintaining a loose monetary policy framework that’s boosting inflation expectations, Price said.

“This has continued to fuel the recent move from growth to value stocks although it seems as though everything is caught up in today’s selloff,” he said. With major indexes not far off all-time highs — both the Dow and S&P 500 finished at records on Friday — it isn’t a shock to see investors “hit pause” and evaluate the catalyst for another move higher, Price said.

Investors are also concerned about the U.S. labor market after a much smaller-than-expected rise in nonfarm payrolls in March was reported on Friday, while companies continue to report difficulties filling open positions.

The National Federation of Independent Business said Tuesday its monthly survey found a record 44% of small businesses said job openings went unfilled in April.

Separately, the Labor Department on Tuesday said job openings in the U.S. topped 8 million in March for the first time ever. There were 7.5 million open jobs in February.

Meanwhile Federal Reserve Board Gov. Lael Brainard, in a Tuesday speech, said an economic boom wasn’t guaranteed and that the central bank should be patient about relaxing its loose monetary policy stance.

Several other Fed officials, including St. Louis Fed President James Bullard,  reiterated on Tuesday that it is not yet time to talk about tapering the central bank’s program of assets purchases.

Which companies are in focus?

• L Brands Inc.
  LB,
  -1.77%
  announced Tuesday that it would separate Victoria’s Secret and Bath & Body Works into two publicly traded companies through a tax-free spinoff that should be completed in August 2021. Shares of L Brands fell 1.8%.
• Novavax Inc.
  NVAX,
  -13.91%
  late Monday said revenue climbed in the latest quarter as the company saw positive results from its COVID-19 vaccine trials in the U.K. and South Africa. Shares fell 13.9%.
• Shares of SmileDirectClub Inc.
  SDC,
  +2.83%
  rose 2.8% after it disclosed a cybersecurity incident and its financial repercussions.
• RealReal Inc.
  REAL,
  -19.10%
  shares dropped 19.1% after the e-commerce retailer of secondhand luxury goods late Monday delivered a narrower first-quarter loss and sales that were above Wall Street expectations.
• Shares of Perigo Co. PLC
  PRGO,
  +2.83%
  rose 2.8% after the Dublin-based provider of consumer self-care products posted weaker-than-expected earnings for its first quarter on Tuesday morning.
• Palantir Technologies Inc.
  PLTR,
  +9.42%
  shares rose more than 9% after delivering results that topped revenue expectations Tuesday morning while announcing that it might consider adding bitcoin or other cryptocurrencies to its balance sheet.

What are other markets doing?

• The yield on the 10-year U.S. Treasury note
  TMUBMUSD10Y,
  1.619%
  rose 2.2 basis points to 1.623%. Yields and bond prices move in opposite directions.
• The ICE U.S. Dollar Index
  DXY,
  -0.04%,
  a measure of the currency against a basket of six major rivals, was down 0.1% after trading at its lowest since late February.
• Oil futures flipped between gains and losses, with the U.S. benchmark
  CL00,
  +0.80%
  settling 0.6% higher at $65.30 a barrel on the New York Mercantile Exchange Gold futures
  GC00,
  +0.04%
  finished slightly lower, down 0.1% at $1,836.10 an ounce.
• European equities fell sharply, with the Stoxx Europe 600
  SXXP,
  -1.97%
  down 2% and London’s FTSE 100
  UKX,
  -2.47%
  falling 2.5%.
• Hong Kong’s Hang Seng Index
  HSI,
  -2.03%
  dropped 2%, while the Shanghai Composite
  SHCOMP,
  +0.40%
  rose 0.4% and Japan’s Nikkei 225
  NIK,
  -3.08%
  sank 3.1%.