STORY: U.S. stocks suffered their worst day in over two years on Tuesday, erasing a sizeable chunk of recent gains, after a hotter-than-expected inflation report dashed hopes that the Federal Reserve might relent on its aggressive plan to hike interest rates.
The Dow fell more than 1,200 points to end nearly 4% lower. The S&P 500 fell more than 4%, while the Nasdaq plummeted more than 5%.
Zachary Hill, head of portfolio management at Horizon Investments, said the Labor Department's consumer price index report, which showed CPI rose last month when economists were expecting it to fall, threw cold water on hopes the Fed could ease up on policy tightening aimed at cooling inflation.
"Markets have been running with this idea that we are past the peak. We knew that gas prices have been coming down and so that was going to help at the headline level. But I think what really spooked markets today was, one, the fact that we've been rallying for the last week or so and so we were clearly setting up for a better number. And two, it's clear from core inflation readings and some internals that we look at that we still have a broadening inflation problem that's seeping into more parts of the economy."
The broad sell-off accelerated in the afternoon, pulling every major sector deep into negative territory.
Interest-rate-sensitive tech giants including Apple, Microsoft, Google-parent Alphabet and Amazon all sinking well over 5%.
Meta Platforms and chip giant Nvidia each lost more than 9%.
Nearly all 500 - all but four stocks - in the S&P 500 suffered losses on Tuesday.
Among the few to post a gain was Twitter, after a majority of the company's shareholders voted to approve the $44 billion takeover agreement by Elon Musk, handing over the deal's outcome to a court battle in which the billionaire is trying to scrap the acquisition.