Tech stocks continue sharp slump as economic-recovery prospects stoke inflation fears

• US stocks declined on Tuesday as expectations for rising inflation dragged on tech mega-caps.
• Investors rotated further to value stocks and small caps from growth names as stimulus optimism fueled bets on economic recovery.
• Bitcoin tanked below $49,000 after trading as high as $55,053.91 Monday afternoon as investors snapped up crypto profits.
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US equities broadly fell on Tuesday as positioning for strong economic growth and a pickup in inflation weighed on the tech sector.

Growth favorites faced fresh pressure after the open as investors bet on Biden-backed stimulus to supercharge the US recovery. The increasing likelihood of a stimulus boost has revived concerns of near-term inflation as fiscal support lifts consumer spending. Value stocks and small caps historically outperform momentum names as inflation rises.

Tech mega-caps that fueled the market's first bounce from pandemic lows saw the most intense selling. The Dow Jones industrial average outperformed amid hopes the economic rebound would revive ailing sectors. Here's where US indexes stood shortly after the 9:30 a.m. ET open on Tuesday:

• S&P 500: 3,852.18, down 0.63%
• Dow Jones industrial average: 31,473.82, down 0.15% (47.87 points)
• Nasdaq composite: 13,262.78, down 2.06%

The tech-led decline mirrors the drop seen to start the week. Stocks closed mixed on Monday as inflation concerns pulled cash out of large-cap names and into reopening bets. The Nasdaq composite ended the session down nearly 2.5%, while the Dow rose slightly.

Falling COVID-19 case counts have also prompted investors to position for a summer recovery. The US reported 52,530 new cases on Monday, according to The COVID Tracking Project. That's the lowest daily total since mid-October. And while the pace of vaccinations has moderated slightly from last week, the US is still averaging about 1.4 million doses a day.

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Federal Reserve Chair Jerome Powell is expected to ease fears of overwhelming inflation when he testifies to the Senate Banking Committee at 10 a.m. ET. Central bank officials have signaled in recent weeks that, though stimulus may lift inflation soon after its passage, the increase will likely be temporary.

Tesla sank for a second straight day to its lowest level since December. Monday's losses saw more than $64 billion erased from the automaker's market cap and led CEO Elon Musk to lose his title as the world's wealthiest person. Bitcoin plummeted as investors took profits from the cryptocurrency's latest run-up. The token hovered just below $49,000 after trading as high as $55,053.91 Monday afternoon. To be sure, prices are still up more than 60% year-to-date.

Spot gold dipped as much as 0.3%, to $1,803.73 per ounce, at intraday lows before erasing most losses. The US dollar strengthened slightly against a basket of Group-of-20 currencies. Treasury yields edged higher as investors dumped the safe havens.

Oil prices pared early gains and tumbled. West Texas Intermediate crude fell as much as 0.72%, to $61.25 per barrel. Brent crude, oil's international benchmark, dropped 0.35%, to $65.01 per barrel.