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Worst Day Of 2022 For The Major Indexes

Tuesday marked the worst day of the year for the broader markets. Market indices fell sharply after August CPI readings showed inflation came in hotter than expected. Such has caused economic concerns and has raised expectations for more aggressive Fed policy.

Benzinga · 09/13/2022 17:14

Tuesday marked the worst day of the year for the broader markets. Market indices fell sharply after August CPI readings showed inflation came in hotter than expected. Such has caused economic concerns and has raised expectations for more aggressive Fed policy. More aggressive Fed rate hikes could drive a slowdown in economic growth and pressure consumer spending and business investment. 

The Dow Jones Industrial Average is a price-weighted index consisting of 30 stocks. It's one of the oldest and best-known measures of stock market performance. The blue-chip index closed down more than 1,275 points, or 3.94%, at 31,104.97 on Tuesday.

The S&P 500 sank 4.32% to 3,932.69 and the Nasdaq Composite plunged 5.16% to end the day at 11,633.57. 

Every stock in the Nasdaq 100 traded lower on Tuesday for the first time in more than two years. 

What Happened: The headline CPI rose 8.3% in August, down from 8.5% in July, according to data from the U.S. Bureau of Labor Statistics. The August CPI reading came in above average economist estimates of 8%.

Core inflation, which excludes volatile food and energy prices, was up 6.3% in August, above average economist estimates for a 6.1% gain.

The latest CPI inflation data is likely a signal that another 0.75% rate hike is coming this month.

"Pulling back on the current policy path at the Federal Reserve at this point would be a strategic error of epic proportions," RSM US chief economist Joseph Brusuelas said following the release. 

Related Link: 3 Pros On What 8.3% CPI Inflation Number Means For The Fed: 'A Strategic Error Of Epic Proportions'

Mark Hamrick, senior economic analyst at Bankrate, referred to the August CPI number as "a reminder that we don’t always get what we want."

"The Federal Reserve looks at the August CPI and likely remains on track for another large rate hike at the upcoming Sept. meeting." Hamrick said.

Tuesday's CPI print is the last major data release the Fed will have before making its next decision on rates, which is due at its meeting on Sept. 20.

Photo: Natalie Murphy from Pixabay.