This week’s inflation report showed that inflation isn’t slowing as much as economists had thought, and the stock market didn’t react well.
U.S. stocks fell Tuesday as the inflation report spurred reaction on Wall Street and other worldwide markets. The Consumer Price Index increased 8.3% in the past 12 months, reflecting rising prices on food, shelter and medical care, the Associated Press reported.
Those increases came despite the fact gas prices have been falling for weeks.
Last month’s increase was lower than July’s 8.5% hike, but it was higher than the 8.1% economists had expected.
In the wake of the report, the AP reported, the S&P 500 dropped 176 points to 3,935, or 4.3%, threatening to snap a four-day winning streak. The Dow Jones Industrial Average lost 1,256 points, or 3.9%, and the Nasdaq Composite dropped 5.2%.
The performance could cause the Federal Reserve, which has raised interest rates several times this year, to contemplate even higher raises to try to further combat inflation.
“Right now, it’s not the journey that’s a worry so much as the destination,” Brian Jacobsen, senior investment strategist at Allspring Global Investments, told the Associated Press. “If the Fed wants to hike and hold, the big question is at what level.”