Inflation Fears Push Stock Prices Down

Warning signs that inflation may be on the increase pushed down stock prices across all our indexes Thursday. An earnings warning from a little-known electronics manufacturer didn't help.

Our InformationWeek 100 index fell 2.99, or nearly 1.0%, to close at 312.48, while the Nasdaq composite fell 14.56, or more than 0.7%, to 1,983.67. The Dow showed little movement, falling 2.06, or less than 0.1%, to close at 10,377.52, while the S&P 500 fell 1.53, or just over 0.1%, to finish the day at 1,132.03.

In a report issued Thursday, the Labor Department said U.S. producer prices rose 0.8% in May, the largest increase in more than a year, and core producer prices excluding food and energy goods increased 0.3%. Both estimates exceeded economists' expectations and raised fears among traders that the Federal Reserve will raise interest rates more aggressively when it meets at the end of the month.

Heightened fears of inflation outweighed good news on the employment front. The number of Americans filing new unemployment claims last week fell to 336,000 from 351,000 the previous week.

Shares of Jabil Circuit Inc., a contract manufacturer for electronics and technology companies, fell nearly 13% after the company announced some management changes and fourth-quarter earnings targets that fell below the expectations of Wall Street analysts. That brought down other tech stocks: Hewlett-Packard and Intel shares each lost nearly 2% of their value to $21.09 and $27.63, respectively. Microsoft bucked the trend by gaining more than 1.6% to $27.77. The Nasdaq-100 tracking stock closed at $36.37, down 36 cents, on moderate volume of more than 73 million shares