Wall Street extends slide on rising inflation fears

  • U.S. consumer prices jump most since June 2009
  • Megacap growth stocks weigh heaviest
  • Energy shares gain as crude climbs
  • Indexes down: Dow 1.4%, S&P 1.72%, Nasdaq 2.28%

NEW YORK, May 12 (Reuters) - Wall Street slid on Wednesday as inflation data blew past expectations and further stoked jitters over the prospect of the Fed raising rates sooner than anticipated.

All three major U.S. stock indexes were deep in negative territory in the wake of the Labor Department's April consumer prices report, which showed the biggest rise in nearly 12 years. read more

The report, which measures the prices U.S. consumers pay for a basket of goods, was hotly anticipated by market participants who have grown increasingly worried over whether current price jumps will defy the U.S. Federal Reserve's reassurances by morphing into long-term inflation.

But pent-up demand from consumers flush with stimulus and savings is colliding with a supply drought, sending commodity prices spiking, while a labor shortage drives wages higher.

"The argument is whether this bout of inflation is transitory or here to stay," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "I think it's here to stay until you see labor costs and commodity costs mitigate some," Tuz added. (Graphic on inflation)

The Dow Jones Industrial Average (.DJI) fell 478.89 points, or 1.4%, to 33,790.27, the S&P 500 (.SPX) lost 71.27 points, or 1.72%, to 4,080.83 and the Nasdaq Composite (.IXIC) dropped 305.72 points, or 2.28%, to 13,083.70.

Of the 11 major sectors in the S&P 500, 10 were in negative territory, with tech (.SPLRCT) down most.

Energy (.SPNY) was the sole gainer, advancing 1.4%, boosted by rising crude prices .

U.S. Treasury yields climbed following the consumer prices report, which helped shield rate-sensitive banking stocks from the broader sell-off.

The CBOE Volatility index (.VIX), a gauge of market anxiety, appeared set to close at its highest level since March 4.

Market-leading mega-caps, including Facebook Inc (FB.O), Amazon.com Inc (AMZN.O), Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O), Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O), fell between 1.6% and 2.9% as investors shied away from what many feel are inflated valuations.

Bumble Inc (BMBL.O) slipped 7.5% ahead of the online dating platform's first-quarter results expected after the closing bell.

First-quarter earnings season is on the wane, with 456 constituents of the S&P 500 having reported. Of those, 86.8% have beaten consensus estimates, according to Refinitiv IBES.

Declining issues outnumbered advancing ones on the NYSE by a 3.81-to-1 ratio; on Nasdaq, a 2.22-to-1 ratio favored decliners.

The S&P 500 posted eight new 52-week highs and no new lows; the Nasdaq Composite recorded 30 new highs and 85 new lows.

Reporting by Stephen Culp Additional reporting by Medha Singh and Sruthi Shankar in Bengaluru; Editing by Lisa Shumaker

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