Stocks fell across industries on Tuesday, erasing gains from a rally a day earlier, as investors sifted through economic reports for clues as to when the era of low interest rates may end.
Consumer goods companies and utilities fell the most. Kraft Heinz fell 4 percent, and Consolidated Edison dropped 2 percent. Nine of the 10 sectors of the Standard and Poor’s 500 index ended lower. Energy stocks climbed as the price of crude oil rose to a seven-month high.
The Dow Jones industrial average lost 180.73 points, or 1.02 percent, to 17,529.98. The S&P 500 index gave up 19.45 points, or 0.9 percent, to 2,047.21. The Nasdaq composite pulled back 59.73 points, or 1.3 percent, to 4,715.73.
Diane Jaffee, a senior portfolio manager at TCW Group, said investors worry that a pickup in inflation suggests the Federal Reserve might raise interest rates soon, threatening a still-sluggish economy. The Fed next meets on rates in June.
“The specter of rising rates in June may be making investors queasy,” said Jaffee.
The Labor Department reported Tuesday that the cost of living in April climbed by the most in more than three years. A separate report said builders are breaking ground on new homes at a faster pace than last year.
Investors worry reports like those could prompt the Fed to raise rates. That could hurt high-dividend stocks like utilities.
Investors will get a better idea of the Fed’s thinking on Wednesday when the central bank releases minutes from its last meeting in April.
Another report showed U.S. industrial production posted the biggest increase in April since November 2014 after dropping the previous two months. Industrial output, which includes output at factories, mines and utilities, rose 0.7 percent from March.
“We’ve got an economy in slowdown mode, with an increase in inflation,” said James Abate, chief investment officer at Centre Funds. “That is the worst possible situation.”
U.S. crude rose 59 cents to $48.31 a barrel in New York. Brent crude, used to price international oils, rose 31 cents to $49.28 a barrel in London. Wholesale gasoline rose 3 cents to $1.63 a gallon, heating oil also rose 3 cents to $1.47 a gallon and natural gas rose 2 cents to $2.05
