NEW YORK: Wall Street stocks fell sharply early Friday following fresh data showing surging consumer prices that quashed hopes inflation would quickly abate.
About 20 minutes into trading, the Dow Jones Industrial Average was down 1.8 percent at 31,701.13.
The broad-based S&P 500 dropped 1.9 percent to 3,943.11, while the tech-rich Nasdaq Composite Index tumbled 2.1 percent to 11,512.02.
Friday’s report showed the consumer price index (CPI) jumped 8.6 percent compared to May 2021, topping analyst estimates and up from 8.3 percent in the 12 months ending in April.
White House officials had warned in recent days that they expected a downcast report as gasoline prices hit new records daily amid the fallout from Russia’s invasion of Ukraine.
US consumer price inflation rises to 8.6% in May: govt
Prices continued to rise last month for a range of goods, including housing, groceries, airline fares and used and new vehicles, and annual inflation remains at its highest rate since late 1981.
Analysts said the report pressures the Federal Reserve to hold to aggressive measures to rein in inflation, including multiple half-point interest rate increases.
“Market participants sense that the Fed is going to have to stay on an aggressive rate-hike path, and, in doing so, risk choking off economic activity,” said Briefing.com analyst Patrick O’Hare.
“That might help quell inflation but it won’t help earnings prospects.”
LBBW’s Karl Haeling said the report also “increases the chances of (Fed Chair Jerome) Powell in the press conference to talk pretty tough” following next week’s two-day monetary policy meeting.
“That’s a negative for the market,” Haeling said.
Comments
Comments are closed for this article.