June CPI report represents that inflation increased again back to a 40-year high in June as rent, and gas costs continue to rise.
This report confirms that Federal Reserve's plan to raise rates significantly. The Dow was reduced up to 1.8%. Early tech stocks and other winners of the pandemic were the main losers again.
The Nasdaq was reduced up to 1.2 percent, a 29% annual decline, which is approximately double the Dow.
Fed and inflation response to it have been the focus of this year's Wall Street sell-off.
June CPI inflation report
Depressing data of the Wednesday CPI report showed that inflation is not only high but actually worsening.
Consumer prices rose 9.1% higher last month year-on-year versus May's inflation rate of 8.6%. It was also below the 8.8% expected by economists.
Following Wednesday's inflation report, traders believe that the Fed will increase major federal funds rates by a minimum of 3 quarters of a percentage point when it's meeting in 2 weeks' time.
According to data from CME Group, traders have a 37 percent chance of betting, up from 0 a month ago.
The risk is that interest rate hikes are a notoriously boring tool and take a long time to have their full impact. If the Federal Reserve becomes too violent towards them, it can trigger a decline.