Dow drops 100 points, S&P 500 drops to lowest since 2020 after another hot inflation report

Stocks fell Thursday morning and the S&P 500 fell to its lowest level since 2020 after a headline consumer inflation report came in higher than expected, indicating that the Federal Reserve will likely continue to raise interest rates.

The Dow Jones Industrial Average was down 151 points, or 0.52%, and also briefly hit its lowest intraday level since November 2020. The S&P 500 fell 1.04% and the Nasdaq Composite fell 1.8%. Big consumer stocks led the losses as the inflation reading stoked fears of a hit to spending. Amazon decreased more than 3% while Home Depot And the costco down 2.5%.

The yield on 10-year US Treasuries rose to over 4% as the bonds were sold – yields are reflected in the price.

Reversal of early gains came after September’s consumer price inflation report higher than economists expected. The CPI rose 0.4% during the month, more than the 0.3% estimate by Dow Jones. On an annual basis, the inflation rate rose by 8.2%.

The report notes that inflation is a persistent problem even with significant increases in interest rates from the central bank. Going forward, the Fed will likely continue to introduce increases and keep interest rates high until there are signs that inflation is abating.

“Oftentimes you can try to find a positive side in some numbers — I can’t. I think that’s why you’re seeing the really brutal reaction right now,” said Steve Sosnick, chief strategist at Interactive Brokers.

Stock futures rose early in the morning and the British pound rose more than 1% against the US dollar after a report that the government there may be rethinking a tax cut plan that finally exacerbated the currency’s slide to decades-low levels. in September, which puts global markets on edge.

Thursday’s CPI report comes a day after the government announced that the Producer Price Index, another inflation gauge, rose more than expected.

Investors also digested the minutes of the Federal Reserve’s September meeting, which were released on Wednesday. Minutes showed The central bank expected to continue raising interest rates until it sees the decline in inflation. But one comment made some believe that the Fed may instead slow, if not reverse, rate hikes if the turmoil in financial markets continues.

Going forward, investors will be watching the start of earnings season. On Friday, major banks JPMorgan Chase, Wells Fargo, Morgan Stanley and Citigroup announced their results.