Dow loses 470 points as inflation concerns seep into markets

Banks and energy companies led a broad pullback for stocks Tuesday, knocking the Dow Jones Industrial Average more than 470 points lower and wiping out the market’s gains from last week.

The S&P 500 lost 0.9%. That, plus its losses Monday, outweigh the benchmark index’s gains last week. The Dow sank 1.4%, its worst day since Feb. 26. Treasury yields mostly edged higher.

The market’s downturn so far this week reflects growing worries among investors that inflation is rising. Any significant acceleration of inflation would be a drag on the overall market and could crimp the broader economic recovery. The selling comes ahead of a key measure of inflation at the consumer level due to be released by the government Wednesday.

Commodity prices have been rising, particularly for such industrial metals as copper and platinum, as well as for such energy commodities as gasoline and crude oil. Tech stocks, which get most of their valuation from the future profits those companies are expected to earn, become less valuable if inflation decreases the value of those earnings.

Big technology companies were among the biggest decliners for a second straight day. Still, financial and energy companies, the best-performing sectors of the S&P 500 so far this year, fell the most. These sectors, in addition to industrials, have been favorites of investors betting that the economy will continue to recover from the pandemic.

“Yesterday, people were just watching to see what’s causing the market to move downward,” said Sam Stovall, chief investment strategist at CFRA. “Today, the question is, ‘maybe this could be more than I was expecting it to be,’ so investors are saying, ‘let me take profits while I can.’ ”