The Dow Jones Industrial Average fell 500 points, or 1.73%. The S&P 500 slipped 2.10%, trading at a two-year low as the Fed aggressively throttles the economy in an effort to tamp down inflation. Nasdaq Composite slumped 3.08%. The yield on the 10-year U.S. Treasury spiked above 4% as bonds sold off – yields are inverse to price.
The headline consumer price index gained at an annual pace of 8.2% in September, compared with an estimated 8.1%. The reading was lower than an 8.3% increase in August.
Core CPI, which eliminates volatile food and fuel prices, gained 6.6% last month, compared with the estimates of a 6.5% increase. The reading was much higher than a 6.3% rise in August.
“It’s saying that inflation is still not under control. The Fed will most likely continue its pace of rate increases,” said Robert Pavlik, senior portfolio manager, Dakota Wealth in Fairfield, Connecticut.
“There is no pivot in the near-term future which the market had been hoping for.”
Traders of U.S. interest-rate futures priced in a fourth straight 75-basis-point hike by the Fed at its November meeting, with some also pricing in a 10% chance of a 100 bps rise.
The report follows data on Wednesday that showed U.S. producer prices increased more than expected in September amid strong gains in the costs of services and goods, suggesting inflation could remain uncomfortably high for a while.