Wall Street Slips Amid Rising Inflation Concerns

Wall Street's Main Indexes Fall Amid Rising Inflation Concerns and Higher Oil Prices

May 19 (Reuters) - Wall Street's main indexes fell on Tuesday as the benchmark 10-year Treasury yield climbed to its highest level in more than a year, driven by mounting inflation concerns and elevated oil prices.

The Dow Jones Industrial Average fell 73.61 points, or 0.15%, to 49,612.51, while the S&P 500 lost 13.59 points, or 0.19%, to 7,389.12. The technology-heavy Nasdaq Composite lost 79.54 points, or 0.30%, to 26,011.19.

The decline in the indexes came as investors took profits after a steep rally that started in late March. The S&P 500 and the Nasdaq were on track for their third straight day of declines.

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Key Drivers of the Market

The surge in the 10-year Treasury yield to 4.687%, its highest level since January 2025, was a key driver of the market's decline. The yield has been rising for three days, fueled by inflation expectations and concerns about the impact of higher interest rates on the economy.

Investors are also worried about the potential for Federal Reserve interest rate hikes. The latest bets on a 25-basis-point increase in rates for December this year rose to 40% probability, while the probability for a 50-basis-point hike was near 14%, up from 4.7% a week ago, according to CME Group's FedWatch tool.

Sector Performance

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Six of the 11 major S&P 500 sectors were lower, with communications services and consumer discretionary the biggest drags on the benchmark index. The Philadelphia Semiconductor Index was up about 1.4% after falling more than 3% earlier in the day.

Defensive Healthcare was leading sector gains, rising 1.2%. Software stocks reversed course to lose ground, with the S&P 500 software index down 1%, after gaining almost 2% earlier in the day.

Individual Stock Performance

Among individual stocks, cloud firm Akamai Technologies fell 2.8% after announcing a $2.6 billion convertible bond offering.

Earnings and Economic Data

Investors are waiting for earnings from AI chip leader Nvidia, due on Wednesday. Results from the world's most valuable company will be closely watched for evidence AI-driven demand is strong enough to justify elevated valuations across semiconductors.

Declining issues outnumbered advancers by a 2.04-to-1 ratio on the NYSE, while the S&P 500 posted 16 new 52-week highs and 21 new lows.