Dow drops more than 500 points as market extends decline

(May 11) Dow drops more than 500 points as market extends decline.

The Dow Jones Industrial Average slid more than 500 points, led by declines in Home Depot and Boeing. The tech-heavy Nasdaq Composite lost 1.2%. The S&P 500 traded 1.1% lower.

Big Tech stocks were all in the red once again Tuesday. Apple dropped more than 2%, while Facebook, Alphabet and Amazon were all down more than 1%.

Tesla shares, the poster boy for growth stocks with lofty valuations and expectations, fell nearly 4%. A Reuters report that the electric carmaker halted plans to expand its Shanghai plant into an export hub, also aided the decline.

“It was an intensification and acceleration in money rotating towards sectors that are more exposed to 1) An economic reflation (so cyclicals) and 2) Rising inflation,” Tom Essaye, founder of Sevens Report, said in a note.

Tech shares, which were the biggest pandemic winners, fell out of favor earlier this year as fears of inflation and higher interest rates crept up. Growth-oriented companies tend to get hit hard by rising rates as they erode the value of their future earnings.

The latest headlines including a labor shortage as well as a jump in Consumer Price Index in March helped fuel inflation worries and accelerate selling of tech shares.