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Wall St Drops as Strong Inflation Data Fuels Rate Hike Bets

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May 12 Reuters Wall Streets major averages fell on Wednesday after strongerthanexpected inflation data stoked fears of tighter monetary policy to combat a possibly longer period of inflation.

The Labor Departments data showed U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints. Excluding the volatile food and energy components, it soared 0.9, the largest gain since April 1982.

U.S. money markets moved fully to price in a 25 basis point interest rate hike by December 2022 after the data.

There is uncertainty over how long inflation is going to exist within the current economic recovery because we can see increases in housing prices, commodities around the world and increase in demand for goods and services, Brian Vendig, president, MJP Wealth Advisors in Westport, Connecticut.

The uncertainty over the path of rates and inflation is making investors reconsider their portfolios, especially in technology stocks and others that had done really well last year.

Rising commodity prices and signs of labor shortage have fueled worries over rising prices, triggering a selloff that sent the SP 500 nearly 3 below its record closing high on Friday, even as the Fed reassured that any price pressure would be transient.

At 957 a.m. ET, the Dow Jones Industrial Average was down 195.17 points, or 0.57, at 34,073.99, the SP 500 was down 30.58 points, or 0.74, at 4,121.52. The Nasdaq…

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