Hot inflation report, more hawkish Fed, stocks fall sharply as Nasdaq falls nearly 3%

Stock markets fell sharply on Tuesday after the key August Inflation Report It came in hotter than expected, with cooling prices and a less aggressive Federal Reserve hurting investor confidence.

The Dow Jones industrial average fell 550 points, or 1.7%. The S&P 500 fell 2.1%, while the Nasdaq Composite fell 2.8%.

More than 480 stocks in the S&P 500 fell, with Facebook-parent Meta losing 5.5% and Caesars Entertainment losing 5.7%.

The August Consumer Price Index report showed higher-than-expected inflation. Even as gas prices fell, headline inflation rose 0.1% for the month. Core inflation rose 0.6% month-on-month. On an annualized basis, inflation stood at 8.3%.

Economists polled by Dow Jones expected a 0.1% decline for overall inflation, with a 0.3% rise for core inflation.

It is one of the last reports the central bank will see ahead of its September 20-21 meeting, where the central bank is expected to deliver them. A third consecutive 0.75 percent interest rate hike To reduce inflation. The unexpectedly high August report could lead the Fed to continue its aggressive hikes longer than some investors expected.

The moves came after four positive sessions for U.S. stocks, bolstered in part by many investors’ belief that inflation has already peaked.

“The CBI report was an unequivocally negative for equity markets. The warmer-than-expected report means we’ll get continued pressure from Fed policy through rate hikes,” said Matt Perron, director of research at Janus Henderson Investors. “This reverses any ‘Fed pivot’ that markets have been hoping for recently. As we have warned over the past months, we are not out of the woods yet and will maintain a defensive stance with equity and sector allocations.”

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