The stock market plunged on Thursday after a worse-than-expected inflation reading—with consumer prices spiking 7.5% in January—raised investor concerns that the Federal Reserve could tighten monetary policy too quickly and send markets into a tailspin.
The Dow Jones Industrial Average fell 1.4%, over 500 points, while the S&P 500 lost 1.8% and the tech-heavy Nasdaq Composite 2.1%.
Inflation rose 0.6% from December, a bigger increase than last month and higher than the 0.4% economists were expecting, thanks to broad gains across food, electricity and shelter prices, the Labor Department said.
Consumer prices are now up a whopping 7.5% from a year ago, still currently at roughly 40-year highs.
The red-hot inflation data also sent government bond yields surging higher: The ten-year Treasury note briefly jumped above 2% on Thursday, its highest level since August 2019 and up from 1.5% in December.
Big Tech and other growth stocks came under pressure following the inflation data, with shares of Amazon and Microsoft each down 1% or more, while shares of bank stocks rose on the prospect of higher interest rates.
Solid earnings reports from several companies helped limit the market’s downside, however: Entertainment giant Disney rose over 3% and soft drink maker Coca Cola nearly 1%.