U.S. stocks are sinking Wednesday following new inflation data that showed prices accelerated for a third consecutive month. The hotter-than-expected report further dashed hopes for Fed rate cuts this year amid fears that progress may be stalling in taming elevated price levels.
The S&P 500 slumped 1.1% in early trading and is on track for one of its worst days of the year so far. The Dow Jones Industrial Average was down 451 points, or 1.2%, as of 9:35 a.m. EST, and the Nasdaq composite was 1.1% lower.
“There are still embers of inflation here and there in the economy,” said Joe Davis, chief global economist at Vanguard.
For shoppers, that’s painful because of the potential for even higher prices at the store. For Wall Street, that’s painful because it could convince the Federal Reserve to hold back on delivering the cuts to interest rates that traders are craving and have been betting on.
The S&P 500 had already leaped more than 20% since Halloween in part on expectations that the Federal Reserve would lower its benchmark interest rate, which is sitting at its highest level in more than two decades. Such cuts would relax the pressure on the economy and encourage investors to pay higher prices for stocks, bonds, cryptocurrencies and other investments.
Source: MONEY WATCH
