(Updates to close of U.S. trading)
* Stock markets tumble as tech stocks sell off
* Inflation angst lingers across assets
* Commodities take breather after rapid rise
* Global asset performance http://tmsnrt.rs/2yaDPgn
* World FX rates http://tmsnrt.rs/2egbfVh
By Koh Gui Qing
NEW YORK, May 11 (Reuters) - U.S. stocks hit a one-month low
on Tuesday as speculation that rising inflation pressure could
prompt interest rate hikes sooner rather than later dragged on
shares and hobbled the dollar, which hovered near a 2-1/2-month
low.
Technology stocks were among the biggest losers, mirroring
a sell-off in China, where talk of tighter regulation sent
technology shares skidding.
But U.S. shares clawed back some of their losses over the
course of the day, with the tech-focused Nasdaq Composite
reversing the bulk of its early 2% decline.
Investors said the snap back in shares suggested that
inflation concerns were not quite so entrenched yet, despite
rising commodity prices and labor shortages in the United
States. They said the sheer volume of money sloshing around in
financial markets also meant some individuals are always looking
to invest their cash on pull-backs.
"Welcome to a lot of money," said Paul Nolte, a portfolio
manager at Kingsview Investment Management, which oversees $2
billion. "The worry is maybe inflation is something more than
transitory, but it looks like this is a mood swing for now
rather than a longer-term concern."
The Nasdaq Composite ended little changed, while the
Dow Jones Industrial Average dropped 1.4%. The S&P 500
fell 0.9%, off a one-month low struck earlier Tuesday.
Bets that inflation could accelerate in the coming months
burst to the fore on Monday when the breakeven rate on five-year
U.S. Treasury Inflation-Protected Securities (TIPS)
- a measure of inflation expectations - jumped to a decade-high
2.717%. It traded at 2.695% by late Tuesday.
The 10-year TIPS breakeven rate stood at
2.539%, indicating that the market sees inflation averaging 2.5%
a year for the next decade.
All eyes are now on the U.S. consumer price index report to
be released by the U.S. Labor Department on Wednesday. Until
then, some investors appeared to be buying on dips.
The dollar, which slipped to a 10-week low on Tuesday on
concerns that mounting price pressures could erode its value,
also narrowed some of its earlier losses.
The dollar index, which measures the greenback
against six major currencies, was little changed at 90.188,
after touching a low of 89.979.
The currencies of major natural resource suppliers such as
Canada held ground amid rising commodity prices. The loonie
was little changed at C$1.2097 after hitting a
3-1/2-year high of C$1.2078.
The Australian dollar, another proxy for commodity
prices, was steady at $0.7839, but off a 10-week high of $0.7891
struck on Monday.
Gold also recouped early declines, as a softer dollar offset
losses generated by rising U.S. Treasury yields. Spot gold
edged up 0.11% to $1,837.39 per ounce, after dropping as
much as 1% earlier.
In keeping with market worries about a pick-up in inflation,
the yield on benchmark 10-year Treasuries edged up
to 1.6235%, though off a high of 1.6310%.
The spread between benchmark two- and 10-year
Treasuries also widened slightly to 146 basis points, up more
than 1 basis point from the previous day.
Oil prices were not spared of the day's volatility, and had
reversed all early losses by the end of Tuesday's session,
lifted by fears of a gasoline shortage after a cyber attack
caused an outage at the largest U.S. fuel pipeline system.
U.S. crude gained 0.8% to $65.44 a barrel. Brent
crude added 0.5% to $68.69 per barrel.
In cryptocurrencies, ether dipped from record
levels hit on Monday, but was nevertheless up 3.7% at $4,101.15.
The value of the second-biggest digital token has surged over
5.5 times so far this year.
(Reporting by Koh Gui Qing in New York and Marc Jones in
London; Additional reporting by Tom Westbrook in Singapore;
Editing by Gabriela Baczynska, Will Dunham, William Maclean and
Dan Grebler)