NEW YORK, New York - Stocks were sold off sharply in the United States on Tuesday following falls across the globe.
Fears of inflation are being blamed for the latest sell-off, but with the dizzying heights reached by stock market indices around the world in recent weeks, the sell-off should not come as a surprise.
"I just think that in general there's this thought that inflation may rear its ugly head," JJ Kinahan, chief market strategist at TD Ameritrade told Bloomberg Tuesday. "We see a little bit higher rates, not significantly, but a bit higher rates. And I think this struggle between value and growth also continues at the same time."
For the second day in a row, it was the technology sector that saw the brunt of the selling with the Nasdaq Composite losing substantially, only to claw back losses before the close.
"What's interesting about tech and the selloff is that it comes in the face of stable yields, a Fed that is likely on hold for a while and some very strong earnings," Michael Arone, chief investment strategist for the U.S. SPDR exchange-traded fund business at State Street Global Advisors was quoted by Bloomberg as saying.
"Markets seem to be anticipating some time of move, in rates and inflation, that could potentially be problematic for the tech and growth trade."
Despite horrific losses early, late buying slimmed the carnage to see the major indices close with respectable losses. The Dow Jones index finished with a deficit of 473.66 points or 1.36 percent at 34,269.16.
The Standard and Poor's 500 cut loose 36.33 points or 0.87 percent to close at 4,152.10.
The Nasdaq Composite ended down 12.43 points or 0.09 percent at 13,389.43.
The U.S. dollar surprisingly weakened. Usually, when stocks fall sharply, the dollar jumps. On Tuesday around the New York close, the euro had extended to 1.2149. The British pound strengthened to 1.4142. The Japanese yen rose to 108.66. The Swiss franc firmed to .9037.
The Canadian dollar advanced to 1.2094. The Australian dollar was steady at 0.7840, while the New Zealand dollar gained to 0.7268.
On overseas equity markets, the FTSE 100 in London dived 2.47 percent. The German Dax shed 1.82 percent, while the CAC 40 in Paris dropped 1.86 percent.
On Asian markets, the biggest domino to fall was Tokyo's Nikkei 225 index which plummeted 909.71 points or 3.08 percent to close Tuesday at 28,608.59.
In Australia, the All Ordinaries lost 88.20 points or 1.19 percent to 7,331.60.
Going against the trend, China's Shanghai Composite advanced 13.86 points or 0.40 percent to 3,441.85. China's consumer price index (CPI), a main gauge of inflation, posted faster growth in April as domestic demand continued to pick up, official data showed Tuesday.
The CPI rose 0.9 percent year on year in April, faster than the 0.4 percent rise recorded in March, according to data from the National Bureau of Statistics (NBS), as reported by Xinhua.
On a monthly basis, the CPI fell 0.3 percent in April, compared with the 0.5 percent decline in March.
In Hong Kong, the Hang Seng declined 581.81 points or 2.03 percent to 28,013.81.