Small company stocks, which have outgained the broader market this year, also fell. The Russell 2000 index gave up 16.63 points, or 0.7%, to 2,327.13.
Investors continue to focus a significant amount of attention on inflation. China’s producer price index, which measures prices of raw goods and services, jumped 9% from a year earlier in May, the fastest increase since 2008 and above analysts’ forecasts. Surging prices for oil and other commodities and manufacturing components such as semiconductors were the main factor behind the jump in producer prices there.
Aside from surging prices of raw materials, fuel and other items needed for manufacturing, factories are struggling to keep up with demand as the pandemic recedes in many places. That has pushed up prices of everything from food to household staples.
Investors will get closely watched U.S. inflation data on Thursday and how it might impact ultra-low interest rates and other market-supporting policies.
The market has been relatively constrained over the last several days and investors have parsed any data to judge whether rising inflation will be temporary, as the Federal Reserve thinks, or more permanent.
The Labor Department’s release of the consumer price index Thursday will add to that discussion, particularly since it comes shortly before the Federal Reserve’s next meeting on interest rate policy next week.
“Is it transitory, or is the Fed behind the curve?” said Sal Bruno, chief investment officer at IndexIQ. “That is going to be a lot of the discussion tomorrow with people reading into which way we’re going.”
Elsewhere in the market, volatility in stocks embraced by investors using online forums like Reddit continued for another day Wednesday. Clover Health fell 23.6% while AMC Entertainment sank 10.4%. Wendy’s sank 12.7% after soaring 25.9% a day earlier.
The original “meme” stock, GameStop, said after the closing bell Wednesday that it has brought on a pair of Amazon veterans as its new chief executive and chief financial officer to aid in its much anticipated digital turnaround. The company also reported a smaller quarterly loss than a year ago as revenue increased. Its shares fell 3% in after-hours trading.