US Stocks Retreat After Hot April CPI, Nasdaq Drops More Than 1%
US stocks fell from record levels on Tuesday (May 12th) after a hotter-than-expected April CPI release reinforced concerns that rising energy prices could weigh on earnings prospects. The Nasdaq fell more than 1%, while the S&P 500 and Dow each weakened by about 0.4%.
Headline inflation rose more than expected to a three-year high of 3.8%, prompting the market to consolidate the view that the Federal Reserve may not cut interest rates this year. Concerns of an "inflationary shock" are seen as increasingly relevant amid evidence of a still-solid labor market, suggesting the path of interest rates is likely to remain high for longer.
The pressure was most felt by large technology stocks and AI chains that had previously led this month's rally. Tesla, Nvidia, Amazon, and Alphabet fell more than 1%, while chip and memory stocks also weakened; Broadcom and AMD fell about 2% amid sentiment linked to South Korea's plans to consider a universal dividend following a surge in AI infrastructure stocks.
Outside of mega-cap stocks, idiosyncratic volatility emerged in earnings-based stocks, with Hims & Hers plunging 15% after its first-quarter earnings report missed expectations. Going forward, the market is likely to monitor a combination of inflation direction, margin sensitivity to energy costs, and changes in interest rate pricing, which will determine sector rotation away from high-beta growth stocks.
Source: Newsmaker.id
