Stocks fell across industries Tuesday, erasing gains from a rally a day earlier, as investors sifted through economic reports for clues as to when the era of low interest rates may end.
Consumer goods companies and utilities fell the most. Kraft Heinz fell 4% and Consolidated Edison dropped 2%. Nine of the 10 sectors of the Standard and Poor's 500 index ended lower. Energy stocks rose as the price of crude oil rose to a seven-month high.
The Dow Jones industrial average lost 180.73 points, or 1%, to 17,529.98. The S&P 500 index gave up 19.45 points, or 0.9%, to 2,047.21. The Nasdaq composite pulled back 59.73 points, or 1.3%, to 4,715.73.
Diane Jaffee, a senior portfolio manager at TCW Group, said investors are worried that a pickup in inflation suggests the Federal Reserve might raise interest rates soon, threatening the still-sluggish economy. The Fed next meets on rates in June.
The Labor Department reported Tuesday that the cost of living in April climbed by the most in more than three years. A separate report said builders are breaking ground on new homes at a faster pace than last year.
Investors worry that reports like those could prompt the Fed to raise rates. That could hurt high-dividend stocks such as utilities.
Adding to the jitters, Politico quoted Atlanta Fed President Dennis Lockhart saying that "action could be taken" at the Fed's June policy meeting.
Investors will get a better idea of the Fed's thinking Wednesday, when the central bank releases minutes from its April meeting.
Among stocks making big moves, LendingClub plunged 9% to $3.60 after the Department of Justice opened an investigation. The company forced out its founder last week after an internal review found irregularities with the way loans were sold.
LendingClub stock traded as high as $25 a share in late 2014, shortly after the company went public.
Pandora Media rose 6% to $10.59 after hedge fund Corvex Management raised its stake and began advocating for a sale of the streaming music company. Corvex said that putting the company on the block is the best answer to rising competition from Spotify and Apple.
Agilent Technologies climbed 3.4% to $44.41 after the Santa Clara, Calif.-based maker of scientific instruments reported better results than analysts expected and raised its annual estimates.
Another report showed U.S. industrial production posted the biggest increase in April since November 2014 after dropping the previous two months. Industrial output, which includes output at factories, mines and utilities, rose 0.7% from March.
Still, production is modest. The report said that factories are operating at 75.3% of capacity, well below their long-run average.
"We've got an economy in slow-down mode, with an increase in inflation," said James Abate, chief investment officer at Centre Funds. "That is the worst possible situation."
In Europe, stocks were mixed. France's CAC 40 fell 0.3%, and Germany's DAX shed 0.6%. Britain's FTSE 100 gained 0.3%.
In Asian markets, Japan's Nikkei 225 rose 1.1% as the yen continued to weaken, a plus for Japanese exporters. Hong Kong's Hang Seng gained 1.2%.
U.S. crude rose 59 cents to $48.31 a barrel in New York. Brent crude, used to price international oils, rose 31 cents to $49.28 a barrel in London. Wholesale gasoline rose 3 cents to $1.63 a gallon, heating oil rose 3 cents to $1.47 a gallon and natural gas rose 2 cents to $2.05 per 1,000 cubic feet.
U.S. government bond prices fell. The yield on the 10-year Treasury note rose to 1.77% from 1.75%. The dollar rose to 109.07 yen from 108.98 yen and the euro fell to $1.1317 from $1.1320.
Precious and industrial metals futures closed mostly higher. Gold rose $2.70 to $1,276.90 an ounce and silver went up 10 cents to $17.25 an ounce. Copper was flat at $2.09 a pound.
3:20 p.m.: This article has been updated with additional information.
1:15 p.m.: This article has been updated with closing prices.
10:27 a.m.: This article has been updated with more recent prices and additional information.
7:48 a.m.: This article has been updated with more recent prices and additional information.