Stocks ended another shaky day lower on Wall Street Wednesday after a highly anticipated report on inflation turned out to be even worse than expected. The S&P 500 fell 0.5% after tumbling as much as 1.6% earlier. The Nasdaq slipped 17.15 points, or 0.2%, to erase nearly all of an early loss of 2.1%. The Dow Jones Industrial Average fell 208.54 points, or 0.7%, to 30,772.79. Stocks took a few U-turns through the day, as has become the norm on Wall Street this tumultuous year, and they recovered much of their losses after a pullback in Treasury yields eased the pressure, the AP reports.
Inflation and the Federal Reserve’s response to it have been at the center of Wall Street’s sell off this year. Wednesday’s discouraging data showed that inflation is not only still very high, it’s getting worse. "For four or five months now, we've been counting on peak inflation and we've been disappointed consistently," says John Lynch, chief investment officer at Comerica Wealth Management. After Wednesday’s inflation report, traders now see it as a lock that the Federal Reserve will hike its key interest rate by at least three-quarters of a percentage point at its next meeting in two weeks. A growing number of traders are even suggesting the Fed will go for a monster hike of a full percentage point.
Investors this week are also getting updates on the other big factor that sets prices on Wall Street: how much profit companies are making. Delta Air Lines fell 4.5% after it reported weaker profit for the spring than analysts expected. High prices for jet fuel and a spate of canceled flights in May and June dragged on its results. Big banks and financial companies are coming up next, as the reporting season gets going for profits made from April through June. JPMorgan Chase, which reports on Thursday, fell 1% Wednesday. Citigroup, which reports on Friday, dropped 1.2%.
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