Inflation Worries Hit Wall Street Markets

US stocks closed lower on Tuesday as rising commodity prices and labour shortages fed fears that despite reassurances from the US Federal Reserve, near-term price spikes could translate into longer-term inflation.

While all three indexes pared their losses from session lows, the sell-off was fairly evenly dispersed across the sectors.

"Today feels like a catch-up in that tech has been weak so far this month and it’s finally spilled over into other areas of the market and we’re seeing broader weakness," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

Economic data released on Tuesday from the Labour Department showed job openings at US companies jumped to a record high in March, further evidence of the labour shortage hinted by Friday's disappointing employment report.

The report suggests labour supply is not keeping up with surging demand as employers scramble to find qualified workers.

Burrito chain Chipotle Mexican Grill announced it would increase the average hourly wage of its workers to US$15, a further sign that the worker shortage in the face of a demand revival could add fuel to the inflation surge.

That worker shortage, along with a supply drought in the face of booming demand could contribute to what is seen as inevitable prices spikes, which the US Federal Reserve has repeatedly said are unlikely to translate into long-term inflation.

"The inflation concerns continue," Detrick said. "The supply chain issues coupled with record stimulus coupled with apparently a tighter labour market have all contributed to fears that inflation could trend higher over the summer months."

"I don’t think (the market) believes the Fed when it says they won’t raise rates until after 2023," Detrick added. "That could be where the market and the Fed do not see eye to eye."

The Dow Jones Industrial Average fell 1.36 percent, to 34,269, the S&P 500 lost 0.87 percent, to 4,152 and the Nasdaq Composite dropped 0.09 percent, to 13,389. (Reuters)