US Stocks Lower on Inflation, Retail Sales

(AP) -- Stocks were moderately lower in morning trading Tuesday as investors reacted negatively to a report that once again showed inflation creeping higher as well as data that showed Americans slowed their spending last month.

The S&P 500 was down 0.2% as of 10:10 a.m. Eastern. The Dow Jones Industrial Average was down 0.4% and the Nasdaq Composite was down 0.4% as well.

The Labor Department said Tuesday that wholesale prices, driven by rising food costs, increased 0.8% in May and by a unprecedented amount over the past year as the U.S. economy emerges from pandemic lockdowns and pushes inflation higher. The monthly gain in the producer price index, which measures inflation pressure before it reaches consumers, followed a 0.6% increase in April and a 1% jump in March.

Over the past 12 months, wholesale prices are up 6.6%, the largest 12-month increase on records going back to 2010.

Investors will hear from the Federal Reserve on Wednesday, when the nation's central bank will finish up its regular policy meeting. The Fed is not expected to raise interest rates in response to higher inflation this month, but investors will be looking for any clues to see if Fed policymakers are becoming concerned about the recent inflationary data.

There are some limited signs that inflation may be cooling in some parts of the economy. Lumber and copper prices have dropped from their highs a few weeks ago. Copper is now trading at an eight-week low.

The yield on the U.S. 10-year Treasury note remained steady on Tuesday after the data, trading at 1.51%.

Meanwhile retail sales fell in May, dragged down by a decline in auto sales and a shift by Americans to spend more on vacations and other services instead of goods. Total sales dropped a seasonal adjusted 1.3% in May from the month before, the Commerce Department said Tuesday. Wall Street analysts expected a smaller decline of 0.5%.

Part of the decline in retail sales had to do with supply chain issues, most notably the lack of semiconductors, which has cut into the availability of electronics and automobiles for months now.