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Stocks tumble on inflation fears

Wall Street posts large, widespread losses on inflation concerns, plus big jumps in crude oil and gold prices.

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By Alexandra Twin and David Goldman, CNNMoney.com staff writers

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NEW YORK (CNNMoney.com) -- Stocks slid Tuesday, with the Dow losing nearly 200 points, as spiking oil and gas prices and a bigger-than-expected jump in a key inflation measure rattled investors.

After the close, Dow component Hewlett-Packard (HPQ, Fortune 500) reported a small rise in quarterly profit that matched preliminary figures it announced last week.

The Dow Jones industrial average (INDU) fell 1.5%. The broader Standard & Poor's 500 (SPX) index lost 0.9% and the tech-heavy Nasdaq composite (COMP) lost almost 1%.

Crude oil prices spiked to nearly $130 a barrel, giving investors reason to retreat following the recent advance.

On Monday, the S&P 500 ended at a fresh 5-month high, while the Dow Jones Transportation average ended at an all-time high.

Steadily rising commodity prices have raised worries about how further pricing pressure will hit an already strained consumer.

"The heart of what's going on today is that people are trying to figure out if there is a fundamental justification with their position in commodities, or if it is just a speculative-driven phenomenon," said Barrett Capital Management Chief Information Officer Russell Lundeberg Jr.

As investors weigh whether the markets have stabilized, or if they should continue to pour money into commodities as a hedge, the markets may continue to bounce around, Lundeberg added.

"Now there's a little profit taking going on, which is creating ebbs and flows in the market."

In addition, morning comments from influential Oppenheimer analyst Meredith Whitney reminded Wall Streeters that the worst of the credit crisis may not have passed. (Full story).

Wednesday morning brings earnings from a few retailers and the release of the weekly oil inventories report. The minutes from the last Federal Reserve meeting are due for release Wednesday afternoon.

Commodity prices: U.S. light crude oil for June delivery rose $2.02 to settle at a record $129.07 on the New York Mercantile Exchange Tuesday, after hitting a new intra-day trading record of $129.60 a barrel earlier in the session. Some experts said the contract's imminent expiration sparked volatility.

The national average price for a gallon of regular unleaded gas rose to a record $3.80 from the previous high of $3.794, according to AAA. It was the 13th straight record high.

COMEX gold for August delivery rose $14.40 to settle at $924.60 an ounce.

Wholesale inflation slows: The Producer Price Index, or PPI, gained 0.2% in April, short of economists' expectations and following a rise of 1.1% in the previous month. But prices excluding food and energy costs rose 0.4%, twice what was expected. (Full story).

Retail earnings: Home Depot (HD, Fortune 500) reported sharply lower sales and earnings that nonetheless topped forecasts. Shares tumbled nearly 6%.

Target (TGT, Fortune 500) reported weaker earnings due to tepid sales and higher costs. However, results topped forecasts. The retailer also reported higher revenue that missed estimates. Shares slipped 1%.

Staples (SPLS, Fortune 500) reported higher earnings that met forecasts on higher sales that topped estimates. The office-supply retailer also reported weaker sales at stores open a year or more, reflecting the cautious consumer-spending environment. Shares inched higher.

Other movers: Declines were broad-based, with every Dow stock falling except for oil services companies Exxon Mobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500).

In addition to Home Depot, other big losers included Citigroup (C, Fortune 500), Intel (INTC, Fortune 500), JPMorgan (JPM, Fortune 500) and General Motors (GM, Fortune 500).

Dow stock AIG (AIG, Fortune 500) dipped after saying that its recent issue of stock and debt should raise about $20 billion in capital, far surpassing the $12.5 billion it said it would raise earlier this month.

A variety of homebuilders, retailers and technology shares declined too. Oil and gold stocks rallied in tune with the higher commodity prices.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 1.24 billion shares. On the Nasdaq, decliners topped advancers by 3 to 2 on volume of 2.04 billion shares.

Other markets: The dollar fell sharply versus the euro and yen.

Treasury prices gained, lowering the yield on the 10-year note to 3.78% from 3.83% late Monday. Bond prices and yields move in opposite directions. To top of page

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