Stocks Tumble on Inflation Fears

An interest rate hike in Europe and falling productivity and rising labor costs in the U.S. had stocks on the defensive once again on Wednesday.

Morgan Stanley also made a bearish call on European stocks, fueling overseas selling that had U.S. futures in the red even before the U.S. Labor Department’s productivity data added to inflationary fears.

Merger news was once again a factor in Wednesday’s trading session. TD Ameritrade gained on pressure from investors to merge with E*Trade or Schwab , and BCE , owner of Bell Canada, edged higher on growing private equity interest. Optical Communications gained on news that it will be acquired by Oplink .

Macrovision jumped on a restructuring.

Fairchild slipped after reaffirming guidance.

Towerstream tumbled after selling 10 million shares at a big discount.

Plato Learning and Transaction Systems fell on their results.

The Nasdaq lost 24 to 2587, the S&P 500 fell 13 to 1517, and the Dow lost 130 to 13,465. Volume declined to 2.93 billion shares on the NYSE, and 2.15 billion on the Nasdaq. Declining issues led by a 26-6 margin on the NYSE, and 20-9 on the Nasdaq. Downside volume was 84% on the NYSE, and 75% on the Nasdaq. New highs-new lows were 65-53 on the NYSE, and 92-72 on the Nasdaq.

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