Wall Street Sees Biggest Bloodbath In 2 Yrs After CPI Data

New York: The higher-than expected inflation rate in the Consumer Price Index (CPI) data that was released on Tuesday sent U.S. stocks reeling as the report escalated chances of an aggressive rate hike by the Federal Reserve.Also Read – Stocks Rise On Wall Street, Building On Gains From Last Week

The U.S. Labour Department’s CPI report showed that monthly CPI grew 0.1 per cent in August from July against an expectation of 0.1 per cent dip. The core CPI, excluding volatile food and energy, increased from 5.9 per cent in July to 6.3 per cent in August. Also Read – Retail Inflation Rises To 7% In August From 6.71 Per Cent In July Over High Food Prices

As a result, the Dow Jones Industrial Average fell 1,276.37 points, or 3.94%, to 31,104.97, the S&P 500 lost 177.72 points, or 4.32%, to 3,932.69 and the Nasdaq Composite dropped 632.84 points, or 5.16%, to 11,633.57. Also Read – Stocks Fall Broadly On Wall Street, Extending Market Losses

“(The sell-off) is not a surprise given the rally running up to the data … We have not yet felt the full impact of all those increases. But we will feel it”, Paul Nolte, portfolio manager at Kingsview Asset Management told the Reuters. “We are at recession’s doorstep”, Nolte added

This year, the Fed has raised borrowing costs faster than that happened anytime before in the last 30-40 years. There is a high likelihood that the Fed could hike rates by a 100 basis points in September, according to Reuters.