Inflation Fears Halt Wall Street's Record Streak

Wall Street closed lower on Monday as inflation jitters drove investors away from market-leading growth stocks in favor of cyclicals, which stand to benefit most as the economy reopens.

Industrial and healthcare shares limited the Dow's decline but the blue-chip average reversed course late in the session to snap a three-day streak of record closing highs.

"The market leadership is not doing all that well this year," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "There's been a general rotation away from growth to other parts of the market."

A demand resurgence is colliding with strained supply of basic materials, helping to fuel inflation worries.

"Once the supply lines are rebuilt this will go away. But it's going to take some time," Nolte added. "It's different from flipping on a light switch."

The break-even rate on five-year and 10-year U.S. Treasury Inflation-Protected Securities (TIPS) touched their highest levels since 2011 and 2013, respectively.

"There's still some push and pull as to whether the market believes inflation is transitory or something that's going to stick around," Nolte said.

The Dow Jones Industrial Average fell 0.1 percent, to 34,743, the S&P 500 lost 1.04 percent, to 4,188 and the Nasdaq Composite dropped 2.55 percent, to 13,402.

Of the 11 major sectors in the S&P 500, six closed red. Tech was the biggest loser, sliding 2.5%.

Hotel operator Marriott International Inc missed quarterly profit and revenue expectations due to weak US bookings which offset a rebound in China. Its shares fell 4.1 percent. (Reuters)