U.S. stocks declined sharply on Wednesday after a sharp rise in consumer prices heightened concerns about inflation.
The Dow Jones Industrial Average fell 681.50 points, or 2%, to 33,587.66, posting its worst day since January. The S&P 500 lost 2.1% to 4,063.04 for its biggest drop since February, while the tech-heavy Nasdaq Composite slid 2.7% to 13,031.68.
Technology shares led U.S. stocks lower as surging commodity prices stoked concern about whether inflation will derail a growth rebound in the world’s largest economy and spoil a record stock rally.
The jump in prices was steeper than expected and exacerbated fears that inflation could prompt the Federal Reserve to accelerate its timeline for scaling back its easy-money policies. Near-zero rates have buoyed demand for stocks, which have hit dozens of records since the coronavirus pandemic sent them tumbling early last year.
A report showed U.S. inflation in the year to April rose at its fastest pace in about 13 years, amid the recovery from the COVID pandemic. The U.S. consumer-price index rose 4.2% from a year ago. The month-over-month rise was 0.8%. Overall, the rise was showed the fastest rate of the climb since September 2008. Core consumer prices (CPI), which exclude volatile food and energy items, grew at 3% year-on-year, shooting above the central bank’s average annual 2% inflation growth target.