Economyabout 15 hours ago· 1 min read
Stock market drops sharply on inflation shock; tech stocks hit hardest
U.S. stock markets fell on May 12 after the hotter-than-expected inflation report, with the Nasdaq sliding 0.71% and broader concerns about earnings durability amid higher energy costs. Semiconductor stocks suffered the largest losses.
Market Selloff Details
Major index moves:
- S&P 500 off 0.37%, closing at 7,400.96
- Nasdaq Composite dropped 0.71% to 26,088.20—recovering from a 2%+ intraday decline
- Dow Jones rose 0.11%, ending at 49,760.56
- Russell 2000 fell 0.97% to 2,842.83, worst performer
Sector breakdown:
- Chip stocks led declines: Qualcomm plummeted 13% (worst day since 2020), Intel down 8%, On Semiconductor and Skyworks Solutions down 6%+ each
- iShares Semiconductor ETF sank 5%
- Tech and discretionary stocks bore the brunt of weakness
- Small-cap stocks suffered as inflation worries outweighed earlier optimism
Bond Market Impact
Treasury yields surged as investors fled equities:
- 10-Year Treasury rose 4.9 basis points to 4.461%, highest since July 2025
- Yield spike signals expectations of higher-for-longer interest rates
Earnings Headwinds
Capital Economics warned of "renewed signs of food inflation accelerating," with the risk that rising gasoline and food prices together will push up household inflation expectations. Companies like Whirlpool have already reported that consumer sentiment hitting record lows is denting demand for discretionary goods.