June CPI report represents that inflation increased again back to a 40-year high in June as rent, and gas costs continue to rise.

CPI Report

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.