Inflation Fears Sink Stocks

Reports showing slowing growth and productivity and rising labor costs slammed stocks on Wednesday, raising fears of more Federal Reserve rate hikes.

Chip stocks led the way lower, with Intel losing 3.4% after announcing job cuts that were half of what traders were hoping for.

Other chip decliners included Altera , Fairchild and Catalyst , which lost ground on their results. Cirrus fell after losing its CFO to Cree .

Corning , Komag , Finisar and PlanetOut also dropped on their earnings news.

Priceline lost 10% after Hutchison Whampoa and Cheung Kong sold 70% of their stake in the company.

HP slipped 1.7% on a board of directors leak investigation.

After the close, Palm fell 10% on a warning, and AMD lost ground on a warning from merger partner ATI .

The Nasdaq tumbled 38 to 2167, the S&P 500 lost 13 to 1300, and the Dow fell 63 to 11,406. Volume rose to 2.33 billion shares on the NYSE, and 1.86 billion on the Nasdaq. Decliners led 26-6 on the NYSE, and 22-7 on the Nasdaq. Downside volume was 81% on the NYSE, and 89% on the Nasdaq. New highs-new lows were 67-28 on the NYSE, and 60-39 on the Nasdaq.