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U.S. stocks drop as inflation hits new four-decade high

NEW YORK
2022-07-14 06:08

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NEW YORK, July 13 (Xinhua) -- U.S. stocks fell on Wednesday as a hotter-than-expected U.S. inflation report unnerved investors.

The Dow Jones Industrial Average decreased 208.54 points, or 0.67 percent, to 30,772.79. The S&P 500 slid 17.02 points, or 0.45 percent, to 3,801.78. The Nasdaq Composite Index lost 17.15 points, or 0.15 percent, to 11,247.58.

Nine of the 11 primary S&P 500 sectors ended in red, with industrials and communication services down 1.2 percent and 1.07 percent, respectively, leading the laggards. Consumer discretionary and consumer staples rose 0.86 percent and 0.01 percent, respectively, the only two gaining groups.

The above market reactions came after data showed U.S. inflation accelerated to a fresh 40-year record, a sign that price pressures are becoming entrenched in the economy.

U.S. consumer price index (CPI), a broad measure of everyday goods and services, soared 9.1 percent in June from a year ago, marking the largest 12-month increase since the period ending November 1981, the Labor Department reported Wednesday.

The reading exceeded the prior 40-year high of 8.6 percent in May and was above the 8.8 percent Dow Jones estimate.

"June CPI inflation rose faster than expected, keeping the Fed on its tightening path and not only cementing 75bp in July, but raising the possibility of a third 75bp hike in September," Will Compernolle, senior economist at FHN Financial, said Wednesday in a note.

The Federal Reserve is raising interest rates aggressively in an effort to stifle rampant inflation, stoking market concerns about a possible recession.
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