Wall Street closes lower as inflation fears prompt tech sell-off

 Industrial and healthcare shares limited the Dow's decline but the blue-chip average reversed course late in the session to snap a three-day streak of record closing highs

By Stephen Culp

NEW YORK (Reuters) - Wall Street closed lower on Monday as inflation jitters drove investors away from market-leading growth stocks in favor of cyclical, which stand to benefit most as the economy reopens.

Industrial and healthcare shares limited the Dow's decline but the blue-chip average reversed course late in the session to snap a three-day streak of record closing highs.

"The market leadership is not doing all that well this year," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. "There's been a general rotation away from growth to other parts of the market."

A demand resurgence is colliding with the strained supply of basic materials, helping to fuel inflation worries.

"Once the supply lines are rebuilt this will go away. But it's going to take some time," Nolte added. "It's different from flipping on a light switch."

The break-even rate on five-year and 10-year U.S. Treasury Inflation-Protected Securities (TIPS) touched their highest levels since 2011 and 2013, respectively.

"There's still some push and pull as to whether the market believes inflation is transitory or something that's going to stick around," Nolte said.

Inflation concerns will be in the minds of investors when the Labor Department releases its latest CPI report on Wednesday.

A shutdown to halt a ransomware attack on the Colonial Pipeline entered its fourth day, hobbling a network that transports nearly half of the East Coast's fuel supplies.

The Dow Jones Industrial Average fell 34.94 points, or 0.1%, to 34,742.82, the S&P 500 lost 44.17 points, or 1.04%, to 4,188.43 and the Nasdaq Composite dropped 350.38 points, or 2.55%, to 13,401.86.