Dow sinks 500 points following hot U.S. inflation report

  • World
  • Saturday, 01 Oct 2022

NEW YORK, Sept. 30 (Xinhua) -- U.S. stocks fell sharply on Friday, as investors were worried about the prospect of further central bank tightening following another hot inflation report.

The Dow Jones Industrial Average shed 500.1 points, or 1.71 percent, to 28,725.51. The S&P 500 decreased 54.85 points, or 1.51 percent, to 3,585.62. The Nasdaq Composite Index was down 161.89 points, or 1.51 percent, to 10,575.62. The three major indexes posted their lowest finishes since 2020.

Ten of the 11 primary S&P 500 sectors ended in red, with utilities and technology down 1.97 percent and 1.94 percent, respectively, leading the laggards. Real estate rose 0.99 percent, the lone gaining group.

Data released Friday showed a key gauge of U.S. inflation came in higher than expected in August despite the Federal Reserve's efforts to bring down prices.

The U.S. Commerce Department said the core personal consumption expenditures (PCE) price index, which excludes food and energy, rose 0.6 percent in August, above the 0.5 percent consensus, for a 4.9 percent year-on-year increase.

The headline PCE inflation rose 0.3 percent for a 6.2 percent year-on-year gain, also above market estimates.

Recent Fed comments underline that the central bank remains focused on combating inflation and is unwilling to deviate from tightening to protect growth or markets.

Fed Vice Chair Lael Brainard on Friday underscored the need to tackle inflation and the importance of not shrinking from the task until it is finished.

Cleveland Fed President Loretta Mester indicated Thursday that the Fed would not stop hiking rates even if this led to a recession.

"The latest developments underline our view that the conditions are not yet in place for a sustained turn in market sentiment," Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note Friday, adding that investors should be prepared for more market volatility.

For September, the Dow dropped 8.8 percent, the S&P 500 tumbled 9.3 percent and the Nasdaq lost 10.5 percent.

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