NEW YORK - Stocks tumbled Tuesday as a troubling reading on wholesale inflation underscored the drag of high energy prices on the economy. Investors, also growing anxious again about banks’ credit woes, sent the Dow Jones industrial average down more than 100 points.
Tuesday’s economic data illustrated how the steep run-up in energy costs this year is affecting businesses. The Labor Department said its index of producer prices jumped 1.4 percent in May — the largest increase since November.
The core producer price index, which strips out often volatile food and energy prices, rose by a mild 0.2 percent. But Wall Street remains concerned that companies are having to swallow ballooning costs — and may soon be forced to pass them on to already strapped customers.
Although crude dipped to about $134 a barrel Tuesday on the New York Mercantile Exchange, it remains near record levels.
Subodh Kumar, global investment strategist at Subodh Kumar & Assoc. in Toronto, said inflation concerns are weighing on stocks as investors try to readjust their models to factor in the effects of energy prices staying high.
The price of oil has doubled in the past year, prompting some investors to call it a bubble, but others say a pullback in prices would only lessen the pricing pressure.
The Dow fell 108.78, or 0.89 percent, to 12,160.30. The Standard & Poor’s 500 index fell 9.21, or 0.68 percent, to 1,350.93, while the Nasdaq composite index fell 17.05, or 0.69 percent, to 2,457.73.
Bond prices rose on sluggish economic data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.20 percent from 4.27 percent late Monday.