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Stocks plummet. Dow drops nearly 1,300 points after worrying inflation data
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Updated September 13, 2022 at 4:54 PM ET
All three major indexes plunged on Tuesday after worse-than-expected inflation data raised fears the Federal Reserve will need to continue raising interest rates aggressively to bring prices under control.
The Dow Jones Industrial Average fell nearly 1,300 points, while the broad-based S&P 500 fell by over 4%.
It was the worst day since June 2020 for both indices.
The Nasdaq suffered an even bigger loss, dropping over 5% for its worst day since March 2020.
The latest consumer price index showed prices rose by 8.3% in August from a year earlier. While that was less than in June, inflation didn't slow as much as Wall Street had expected.
The inflation data caught investors off guard. They had been holding onto hope prices would have moderated more in August.
But the latest CPI data showed a wide range of things continue to rise in price, including essentials like food, electricity and rent.
Markets are now expecting the Fed will need to raise interest rates by three-quarters of a percentage point at its meeting next week, the third consecutive rate hike of that size.
Some traders were even bracing for the Fed to raise interest rates by a full percentage point.
"Overall, inflation readings remain unacceptably high for policymakers," said Rubeela Farooqi, the chief U.S. economist at High Frequency Economics.
"Coupled with a labor market that is still strong, the data seal the deal for another aggressive, 75-basis point rate hike next week," she wrote in a note after the data were released.
Copyright 2022 NPR. To see more, visit https://www.npr.org.
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