The Dow Jones Industrial Average fell 550 points, or 1.7%. The S&P 500 fell 2.1% and the Nasdaq Composite sank 2.8%. More than 480 S&P 500 stocks fell, with Facebook parent Meta down 5.5% and Caesars Entertainment losing 5.7%. August’s consumer price index report showed a higher-than-expected reading on inflation. Core inflation rose 0.1% month-on-month, even as gas prices fell. Core inflation rose 0.6% month-on-month. On an annual basis, inflation was 8.3%. Economists polled by Dow Jones had expected headline inflation to fall 0.1 percent, with core inflation up 0.3 percent. The report is one of the last the Fed will see before its Sept. 20-21 meeting, where the central bank is expected to raise interest rates for the third straight time by 0.75 percentage points to tame inflation. The unexpectedly high August report could lead the Fed to continue its aggressive hikes longer than some investors expected. The moves come after four consecutive positive sessions for US stocks, boosted in part by many investors’ belief that inflation had already peaked. “The CPI report was unequivocally negative for equity markets. The hotter than expected report means we will see continued pressure from Fed policy through rate hikes,” said Matt Peron, director of research at Janus Henderson Investors. “It also prevents any Fed ‘first move’ that markets were hoping for in the near term. As we have warned over the past few months, we are not out yet and will maintain a defensive stance with stocks and sector allocations. “
