Wall Street tumbled Friday as hotter-than-expected inflation data sparked concerns about the Federal Reserve’s next moves. The S&P 500 was on track for a weekly decline, erasing gains from its recent rebound.
At midday, the S&P 500 dropped 1.5%, the Dow lost 1.3%, and the Nasdaq Composite plunged 2.1%.
Bond markets saw a shift as investors moved away from equities. The 10-year Treasury yield (US10Y) dipped to 4.28%, down 7 basis points, while the 2-year yield (US2Y) fell to 3.95%, slipping 5 basis points.
According to the Federal Reserve’s Core PCE Price Index the most reliable inflation measurement grew 0.4% during one month beyond the projected rise of 0.3%. Year-over-year, it rose 2.8%, also slightly above forecasts. The inflation data made people guess the Fed would wait longer before easing its interest rates to protect price stability.
Market participants felt extra stress because of their concerns about import taxes. The planned economic sanctions from April to May made investors fear worsening market instability. On Thursday the market’s uneven trends showed investors they need to stay cautious since inflation and trade risks still threaten them.
This article first appeared on GuruFocus.
