The Middletown Press (Middletown, CT)

Stocks fall broadly, dragging indexes lower

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Stocks fell broadly Tuesday and dragged major indexes lower for the week as investors deal with another day of choppy trading.

The market had started higher after the latest data on inflation came in better than economists had expected, but reversed course within the first hour of trading.

The S&P 500 fell 0.6 percent as of 2:46 p.m. The benchmark index’s 11 sectors were all in the red, with banks and industrial and communicat­ion companies weighing down the index the most.

The Dow Jones Industrial Average fell 317 points, or 0.9 percent, to 34,552 and the Nasdaq fell 0.5 percent. The Russell 2000 index of small companies was down 0.4 percent.

U.S. consumer prices rose a lower-than-expected 0.3 percent last month, the smallest increase in seven months and a hopeful sign that inflation pressures may be cooling. Investors initially reacted well to the data and stocks gained ground early on, but the gains quickly faded.

Bond yields eased following the Labor Department’s report. The yield on the 10-year Treasury fell to 1.28 percent from 1.32 percent late Monday. It had been rising overnight to about 1.34 percent shortly before the report was released.

The lower bond yields weighed down banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 3 percent and JPMorgan was down 2.2 percent.

Inflation has been a key concern for investors, who are trying to gauge how it will impact both the economy’s recovery and the Federal Reserve’s policy on maintainin­g low interest rates. The central bank has said higher costs for raw materials and consumer goods will likely remain temporary as the economy recovers, but analysts are concerned that the higher prices could stick around and dent companies’ bottom lines while also crimping spending.

“There are still inflationa­ry pressures even if they (consumer prices) came in lower than expected,“said Kristina Hooper, chief global market strategist at Invesco. “It doesn’t mean that it’s over.”

The most recent report on inflation at the wholesale level was worse than expected, signaling problems for companies contending with higher costs, she said.

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