Shares of industrial and transportation companies fell amid concerns about wholesale inflation.
Rising energy prices due to the closure of the Strait of Hormuz could significantly increase inflation and interest-rate risks, strategists warned.
One strategist said recent visits with companies exposed to data-center infrastructure and related power-plant demand suggests a boom in U.S. capital spending will continue. A surge in prices of small-cap and infrastructure companies in recent months was entirely driven by accelerated earnings growth, as illustrated by the fact that price-to-earnings multiples have not expanded this year, said Eric Marshall, president of Dallas mutual-fund firm Hodges Capital. "It does pose some risk if we see earnings lose momentum, not much room for multiple expansion with inflation and now worried about interest rates potentially going up if we don't see inflation moderate and things settle down on the commodities front."
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
