Investors rebounded in stocks on Tuesday, which began as a sell-off in tech companies, which expanded into other sectors, leading major US indices down.
The Dow Jones Industrial Average lost nearly 450 points, or 1.3 percent, in mid-day trading. The S&P 500 was down 0.8 percent and the tech-heavy Nasdaq Composite was down 0.1 percent, but was down 2.2 percent on the day.
Investors’ concerns over rising inflation costs have affected high-growth tech stocks in recent weeks. The Nasdaq is down about 5 percent since the beginning of the month. But the sell-off spread to other areas on Tuesday, affecting everything from retailers to industrialists and banks.
LPL Financial’s chief market strategist, Ryan Detrick, said, “What began in the technology sector earlier this month finally turned into broader markets.” “While we are approaching a record earnings season, continued supply chains and labor shortages are adding to potential inflationary pressures.”
Companies ranging from Occidental Petroleum and Home Depot to Caesars Entertainment and home-builder DR Horton were among the market bottoming stocks. All traded at least 3 percent less in afternoon business.
However, some companies downplayed the trend. For example, after a 49 percent increase in sales in the first quarter, Palantir grew more than 7 percent.
Investor’s apprehension about the market was helped by recent figures from the Labor Department, which showed job openings reached record highs, while companies struggled to fill positions. As the economy is heating up, the data has helped investors recover from labor shortages.
Along with labor shortages, rising costs due to rising demand and supply-chain issues could also hurt investor appetite for the coming months.
Tuesday’s fall sent the Coby Volatility Index, or VIX, a measure of fear in the markets, rebounding as the market climbed higher. Since March, it was trading at a high level of 23.73. It is still about 10 percent on the day. The VIX has been below 20 in recent weeks as the stock hit fresh highs.
Brian Price, head of investment management for the Commonwealth Financial Network, said the markets could continue to have turmoil in the coming weeks unless there was more clarity on spending and tax plans coming out of Washington.
The Nasdaq Composite is down only 0.1 percent as investors sell tech stocks.
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