Most US stocks fell after midday in choppy trading on Monday, with materials leading the decliners and oil prices slipping.
The Dow Jones Industrial Average fell 0.4% to 34,604.57 and the S&P 500 declined 0.3% to 4,217.21. Nasdaq was up 0.1% to 13,826.30. While industrials and financials also declined, the real estate stocks were among the biggest gainers.
Annualized inflation rate in the US, as measured by the consumer price index, is expected to jump to 4.7% in May, the highest level since September 2008, according to data compiled by Trading Economics. A high rate is likely to pressure stocks, especially high growth areas such as technology and materials.
"Inflation has mixed implications for earnings but is generally a positive," a report from Goldman Sachs said. "Inflation can become a headwind to valuations if it leads to expectations of Fed tightening and higher real interest rates."
Treasury Secretary Janet Yellen clarified her comments after market participants interpreted her remarks to mean a potential increase in rates to combat rising inflation, a report from Stifel said. "It's not something I'm predicting or recommending," Yellen was quoted as saying.
Yellen had said she didn't anticipate a bout of persistently higher inflation as a result of the increase in fiscal spending but that if one occurred, the central bank has the tools to deal with it.
The Group of Seven countries reportedly agreed on Saturday to back a global minimum corporate tax of at least 15% to encourage multinational firms from looking for lower tax havens around the world to avoid higher taxes in home countries. The move could help governments collect a higher level of taxes from big firms companies such as Apple (AAPL) and Facebook (FB).
West Texas Intermediate crude oil futures declined 0.2% to $69.48 per barrel. The 10-year US Treasury yield increased 1 basis point to 1.57%.
In company news, Biogen (BIIB) and Eisai's investigational treatment for Alzheimer's disease, Aduhelm, was approved by the US Food and Drug Administration under the "accelerated approval" pathway, according to a Monday statement from the FDA. Shares of Eli Lilly (LLY), which is developing its own drug to treat Alzheimer's, jumped by 11.7% intraday, the most on the S&P 500.
Morgan Stanley downgraded Progressive (PGR) to underweight from equal-weight, with a price target of $85, which is below $96 that the company is trading on Monday. Shares fell by 4%, the second-worst performer on S&P 500.
On the Nasdaq, the biggest gainer was Moderna (MRNA), whose shares advanced by 7.4%. The company has applied for authorization of its COVID-19 vaccine in the European Union and Canada for adolescents aged 12 and older and partnered with Medison Pharma to bring its vaccine to market in Central Eastern Europe and Israel.
In the precious metals markets, gold was up 0.3% to $1,897.80 an ounce, with silver up 0.5% to $28.03 an ounce but copper down 0.2% to $4.52 per pound.
Among energy ETFs, the United States Oil Fund rose 0.3% to $47.41 and the United States Natural Gas Fund was down 0.6% to $10.82. Among precious-metal funds, the Market Vectors Gold Miners ETF was down 0.1% to $38.55 and SPDR Gold Shares were up 0.2% to $177.44. The iShares Silver Trust was up 0.5% to $25.90.