Tech shares lead stocks lower on Wall Street

Technology companies helped drag stocks lower Thursday on Wall Street, knocking the S&P 500 into the red for the week.

The benchmark Standard & Poor’s 500 index dropped 0.4% and is now on track for a 0.3% loss for the week. Technology companies, whose pricey valuations make them more sensitive to inflation fears, were the biggest weight on the market. Microsoft fell 0.6% and Apple lost 1.2%.

Retailers, hotel operators and a variety of other companies that rely on direct consumer spending also posted some of the biggest declines, as did communications companies. Etsy slid 5.4%, Tesla dropped 5.3%, Wynn Resorts fell 4.1% and Facebook lost 0.9%. Banks and healthcare companies rose.

The selling came as investors weighed the latest economic reports showing that unemployment claims are falling but labor costs are rising. Traders were also looking ahead to the government’s latest monthly jobs report Friday, which could provide more clarity on the economic recovery and the potential for higher inflation.

The S&P 500 fell 15.27 points to 4,192.85. The Dow Jones industrial average dropped 23.34 points, or 0.1%, to 34,577.04. The tech-heavy Nasdaq lost 141.82 points, or 1%, to 13,614.51. The Russell 2000 index of smaller-company stocks gave up 18.59 points, or 0.8%, to 2,279.25.

Bond yields rose. The yield on the 10-year Treasury rose to 1.63% from 1.59% late Wednesday.

Markets have been wobbly all week as investors closely watch the labor markets for more signs of economic growth and consider any information that could give more clues about rising inflation. Labor costs rose at a 1.7% rate in the first quarter, up from the initial estimate that costs had fallen 0.3%. That could stoke more fears that inflation might run hotter than expected.

Rising inflation is expected as the economy recovers from the pandemic’s impact, but the key question for many on Wall Street is whether it will be temporary.

“The main concern in the markets, rightfully so, is inflation,” said Cliff Hodge, chief investment officer for Cornerstone Wealth. “Data points are beginning to confirm the view that inflation is likely to be more sticky.”

Wall Street will get more detailed data on the labor market Friday when the Labor Department releases its monthly jobs report. Economists are projecting that it will show employers added 650,000 jobs in May.

Expectations of a strong increase in hiring have stoked worries about inflation and how the Fed may respond to it. The concern is that the global recovery could be hampered if governments and central banks have to withdraw stimulus to combat rising prices.

Inflation worries are also butting up against the recovery seemingly shifting from a sharp rebound to a grind, which could mean more choppiness as the economy adjusts.

“When the rubber meets the road with the realities of reopening, we think we could be in for a rocky period,” Hodge said.

European and Asian markets closed mixed.