U.S. stocks declined sharply on Wednesday as hotter-than-expected inflation data triggered massive selling, especially in technology shares.
The Dow Jones Industrial Average fell 681.50 points, or -2%, to 33,587.66, posting its worst day since January.
The blue-chip benchmark tumbled as much as 713 points at its session low.
The S&P 500 lost 2.1% to 4,063.04 for its biggest drop since February.
The tech-heavy Nasdaq Composite slid 2.7% to 13,031.68, bringing its weekly decline to more than 5%.
Inflation accelerated at its fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago, compared to the Dow Jones estimate for a 3.6% increase. The monthly gain was 0.8%, versus the expected 0.2%. Excluding volatile food and energy prices, the core CPI increased 3% from the same period in 2020 and 0.9% on a monthly basis. The respective estimates were 2.3% and 0.3%.
“Investors who may have been looking for a reason to lighten up on a stock market that was up more than 10% year to date found a good one: rising inflation,” Chris Hussey, a managing director at Goldman Sachs, said in a note.
Investors have been fearful of a pick-up in inflation as it could squeeze margins and erode corporate profits. If price pressures run too hot for a sustained period of time, the Federal Reserve would be forced to tighten monetary policy.
The Cboe Volatility Index, also known as Wall Street’s fear gauge, popped above 28 at its session high during Wednesday’s stock rout. The VIX is a measure of fear or expected volatility in the markets computed from option prices on the S&P 500.
Reference: CNBC
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