NEW YORK – Wall Street equities took a beating on Tuesday following disappointing US inflation data, ending the day with steep losses in the worst trading day in weeks.
The benchmark Dow Jones Industrial Average plunged nearly 1,300 points, a 3.9 per cent loss to finish the session at 31,104.97.
The broad-based S&P 500 dropped 4.3 per cent to 3,932.69, while the tech-rich Nasdaq Composite Index collapsed 5.2 per cent to 11,633.57.
Investors had been clinging to hopes that slowing price increases would allow the Federal Reserve to eventually pull back on its tough anti-inflation fight, but the data extinguished those hopes for now.
While the annual increase in the consumer price index (CPI) slowed slightly in August to 8.3 per cent, inflation actually rose 0.1 per cent compared to July, the Labour Department said, a disappointing result amid widespread expectations that CPI would fall in the month.
More concerning, the report showed that excluding volatile food and energy prices, “core” CPI accelerated sharply in August, and rose 6.3 per cent over the past 12 months, after the 5.9 per cent pace seen in July and June.
Despite the welcome relief from falling gasoline prices, food, housing and medical care costs continue to rise.
Economists say the data confirm the Fed will announce a third consecutive three-quarter point hike.
That prompted the worst point loss for the Nasdaq since May 5.