Stock losses deepen, sending Dow down 1,000 points Tuesday afternoon, as hot inflation reading dashes hopes for Fed slowing rate hikes.
Most of Wall Street came into the day thinking the Fed would hike its key short-term rate by a hefty three-quarters of a percentage point at its meeting next week. But the hope was that inflation was in the midst of quickly falling back to more normal levels after peaking in June at 9.1%.
Markets honed in on a 0.6% rise in such prices during August from July, double what economists expected, said Gargi Chaudhuri, head of investment strategy at iShares. “The Fed can’t let inflation persist. You have to do whatever is necessary to stop prices from going up,” said Russell Evans, managing principal at Avitas Wealth Management. “This indicates the Fed still has a lot of work to do to bring inflation down.”Higher rates hurt the economy by making it more expensive to buy a house, a car or anything else bought on credit.have already hit their highest level since 2008, creating pain for the housing industry.
In the stock market, all but 10 of the stocks in the S&P 500 fell. Technology and other high-growth companies fell more than the rest of the market because they’re seen as most at risk from higher rates.Apple, Microsoft and Amazon all fell more than 4% and were the heaviest weights on the market. The communication services sector, which includes Google’s parent company and other internet and media companies, sank 4.