Stocks fell Tuesday, with the major indexes adding to Monday's losses as inflation concerns rose.

[Click here to read what's moving markets heading into Wednesday, May 12]

The Dow's losses accelerated into the end of the trading day, bringing the index's decline to nearly 500 points, or about 1.4%. A day earlier, the Dow briefly topped 35,000 for the first time ever before erasing gains to end in the red. The Nasdaq ended just below the flat line after its worst day since March on Monday, with technology stocks sliding as traders rotated away from high growth stocks that could be impacted by rising inflation during the recovery out of the pandemic.

With a strong quarterly earnings season winding down – aside from a couple notable names including Disney (DIS) reporting later this week – investors are taking stock of the next catalysts for markets, with rising prices a key focal point.

According to data from Bank of America, mentions of inflation have increased nearly 800% year-over-year in quarterly earnings calls and reports. Bank of America equity strategist Savita Subramanian said that strong earnings, rising inflation and improving corporate sentiment "all point to a continued rotation into Value."

“We have an accelerating growth environment with the prospects for some inflation. And for investors, when they think about inflation, they tend to move away from tech stocks, because they think of tech stocks as longer-duration assets in which you're not going to be paid well into the future, and they'd instead rather own parts of the market that are more highly correlated with nominal GDP, " Brian Levitt, global market strategist for Invesco, told Yahoo Finance. "What we're going through right now is a reversion back to where we likely otherwise would have been had it not been for the coronavirus outbreak. In that reversion, you'll see more economic sensitive names outperform."

"But it doesn't change the long-term structural story," he added. "The long-term structural stories, all the shifts that are taking place in society, they don't change. And those tech stocks are on the cutting edge of it, so they were bound for some type of volatility or some type of correction, particularly if inflation concerns increased.”

This week, investors are set to also receive the latest monthly consumer price index and producer price index from the Bureau of Labor Statistics, which are each expected to reflect a strong jump in prices over last year's pandemic-depressed levels. The sustainability of these inflationary trends will ultimately guide the Federal Reserve's monetary policy decisions, determining whether they will maintain their current accommodative policies that have boosted both the economy and underpinned asset prices, or pull back some of their support.

“One of the big questions of course is, how does the Fed respond to all this inflationary pressure out there, and how long can they hold onto this concept of being transient before they have to start saying, we’re going to either pull back on quantitative easing asset purchases, or we’re going to have to start raising the Fed funds rate," Robert Dye, Comerica Bank chief economist, told Yahoo Finance. "They’re going to telegraph that well in advance, but I don’t know if they’re going to be able to hold out until the end of this year like some in the Fed have implied.”

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4:03 p.m. ET: Stocks post back-to-back sessions of losses, Dow drops 472 points, or 1.4% for worst day since February

Here were the main moves in markets as of 4:03 p.m. ET:

• S&P 500 (^GSPC): -36.34 (-0.87%) to 4,152.09

• Dow (^DJI): -472.47 (-1.36%) to 34,270.35

• Nasdaq (^IXIC): -12.43 (-0.09%) to 13,389.43

• Crude (CL=F): +$0.44 (+0.68%) to $65.36 a barrel

• Gold (GC=F): +$0.70 (+0.04%) to $1,838.30 per ounce

• 10-year Treasury (^TNX): +2.2 bps to yield 1.6240%

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12:41 p.m. ET: Market could see a 'short-term correction' given elevated valuations: CIO

While technology stocks have borne the brunt of the latest drop in equity prices, the broader stock market as a whole may also be due for a correction as valuations trend back down from their current elevated levels, one strategist told Yahoo Finance.

“I think the correction in tech was certainly justified,” Ernesto Ramos, BMO Global Asset Management U.S. chief investment officer, told Yahoo Finance. “The whole market probably will see a short-term correction given the elevated valuations as a whole. But that's just going to be a pause because there was so much liquidity in the system."

"You have fiscal stimulus in the order of $6 trillion roughly speaking between the recovery and subsequent plans that Biden has put forth, and you have monetary stimulus, which is absorbing all that fiscal stimulus," he added. "So it is incredibly favorable for liquidity conditions. Now that also brings up the other concern that we have, [which] is leverage. As you have so much liquidity in the system, you start seeing leverage grow in some hidden corners of the market. We don't know right now, but where is the next Archegos, for example, going to take place? There'll be a shoe to drop somewhere down the line."

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11:01 a.m. ET: San Francisco Fed's Daly says Fed needs to 'stay steady' following jobs report miss

Federal Reserve Bank of San Francisco President Mary Daly told Yahoo Finance's Brian Cheung that Friday's sharply disappointing April jobs report suggested the central bank's job was not done yet in supporting the economic recovery.

“We’re in a transition state. I see some momentum building. I’m very encouraged, I remain bullish about the future,” Daly told Yahoo Finance in an exclusive interview on Monday. “But we’re not there yet. And we’re going to have fits and starts and we have to stay steady in the boat.”

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10:34 a.m. ET: U.S. home prices jump by a record margin amid flurry of purchases

Prices for single-family homes in the U.S. surged by the most on record in the first three months of the year, with tight inventory levels and a jump in demand generating a stratospheric rise in prices.

Prices rose 16.2% year-over-year to reach a record high of $319,200, the National Association of Realtors said Tuesday. Of 183 metro areas tracked by the association, 163 saw double-digit prices increases in the first quarter, up from 161 in the final three months of 2020.

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10:21 a.m. ET: Two reasons why cyclical and value stocks may have more room to run: Strategist

So far this year, cyclical and value stocks and sectors have far outperformed technology names, with high-growth stocks giving back 2020's gains. According to some strategist, this change in leadership may still have room to run.

"There are two very straightforward reasons," why tech stocks have come under pressure and cyclical names have outperformed, Andrew Slimmon, managing director at Morgan Stanley Investment Management, told Yahoo Finance. "Coming out of recessions, cyclical stocks always do the best because they're the ones that get pounded in recessions. And if you look back to 2009 they absolutely rocketed off the lows."

This time, "they actually didn't start outperforming the growth stocks until last fall, and it was right in front of when it became apparent that a vaccine was coming, that's when the economically sensitive stocks started to rally," Slimmon added. "They're not back to where they are relative, so it's not to late to buy them for that reason."

"The second reason is, the Fed's changed policy," he said. "I think they're going to let the economy run hot, and we're seeing that in some of these inflationary pressures. So I think there's more to go in value."

"When we look at the data, investors, whether in retail or professional investors, they're still overweight growth stocks, they're still overweight tech stocks," Slimmon added. "They're still underweight value. So I think there's more to go here."

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10:00 a.m. ET: Job openings surged by 8.1 million in March, reaching the highest level on record

U.S. job openings rocketed to a record high in March as vaccine-enabled business reopenings at the start of spring left many firms scrambling to find workers to fill their vacancies.

Job openings in March rose to 8.123 million, according to the Bureau of Labor Statistics' monthly report. This marked the highest level since the BLS began tracking the metric in late 2000. This was well above the 7.5 million openings expected, according to Bloomberg data, and jumped from the upwardly revised 7.526 million openings from February.

The layoffs and discharge rate fell to a series low of 1.0% in March, the BLS added, while the quits rate remained unchanged month-on-month at 2.4%.

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9:30 a.m. ET: Stocks open lower

Here's where markets were trading shortly after the opening bell:

• S&P 500 (^GSPC): -48.07 points (-1.15%) to 4,150.36

• Dow (^DJI): -269.09 points (-0.77%) to 34,473.73

• Nasdaq (^IXIC): -254.37 points (-1.86%) to 13,152.42

• Crude (CL=F): -$1.02 (-1.57%) to $63.90 a barrel

• Gold (GC=F): -$15.90 (-0.87%) to $1,821.70 per ounce

• 10-year Treasury (^TNX): +2.5 bps to yield 1.627%

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8:29 a.m. ET: Small business optimism reaches a five-month high in April, but labor shortages hit record level

Small business optimism rose to a five-month high in April, according to the National Federation of Independent Business' monthly survey, as consumer demand picked back up and stoked spending at some of the firms hardest hit by the pandemic. However, business owners flagged labor shortages as an exigent issue, and average selling prices were hiked.

The headline index rose to 99.8 in April from 98.2 in March, bringing the Optimism Index up by a total of 4.8 points over the last three months. However, a record 44% of owners reported that they had job openings that could not be filled, and the net percent of owners increasing average selling prices rose by 10 percentage points to 36%, or the highest reading since 1981.

“Small business owners are seeing a growth in sales but are stunted by not having enough workers,” NFIB Chief Economist Bill Dunkelberg said in a press statement. “Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth. Owners are raising compensation, offering bonuses and benefits to attract the right employees.”

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7:23 a.m. ET Tuesday: Nasdaq futures drop 1%

Here's where markets were trading ahead of the opening bell:

• S&P 500 futures (ES=F): 4,151.75, down 31.75 points or 0.76%

• Dow futures (YM=F): 34,505.00, down 163 points or 0.47%

• Nasdaq futures (NQ=F): 13,182.75, down 174.00 points or 1.3%

• Crude (CL=F): -$0.42 (-0.65%) to $64.50 a barrel

• Gold (GC=F): +$4.10 (+0.22%) to $1,841.70 per ounce

• 10-year Treasury (^TNX): +0.6 bps to yield 1.606%

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6:14 p.m. ET Monday: Stock futures open mixed

Here's where markets were trading as the overnight session kicked off:

• S&P 500 futures (ES=F): 4,180.75, down 2.75 points or 0.07%

• Dow futures (YM=F): 34,678.00, up 10 points or 0.03%

• Nasdaq futures (NQ=F): 13,327.00, down 29.75 points or 0.22%

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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