Investing.com-- The S&P 500 closed lower Thursday, as rising Treasury yields on signs of sticky inflation dented rate-cut hopes offsetting an Nvidia-led charge higher in tech stocks. At 16:00 ET (20:00 GMT), Dow Jones Industrial Average fell 605 points, or 1.
5%, while S&P 500 fell 0.7%, and the tech-heavy NASDAQ Composite fell 0.4%.
Fresh signs of pick up in inflation cools rate cut bets The S&P Global (NYSE: SPGI ) Flash US PMI Composite Output Index rose sharply from 51.3 in April to 54.4 in May, with the report also highlighting that "the rate of inflation accelerating to register the second-largest monthly increase seen over the past eight months.
" Fresh fears that a underlying strength in the economy could spark a revival inflation, cooled investor expectations for rate cuts just a day after the Fed's May meeting minutes showed members were concerned about stalling disinflation. Adding to fears about demand-led inflation, initial jobless claims fell more than expected in the week ended May 11. Treasury yields jumped, with the yield on the rate-sensitive 2-year treasury rising 5.
7 basis points to 4.94%, forcing traders to rein in their bullish bets on stocks. About 48% of traders expect a rate cut in September down from 51% a day earlier.
Atlanta Fed president Raphael Bostic said Thursday, however, that the last couple of inflation prints suggest inflation remains on track to return to the 2% target, albeit at a slow pace. Nvidia's surge on positive Q1 boosts tech sector .