Inflation news slams market

An eye-opening report on inflation that was hotter than expected slammed into the bond market on Wednesday, sending yields jumping and helping knock stocks lower.

Prices for beef, electricity and other items that consumers paid in October surged from year-ago levels at the fastest overall pace since 1990, raising expectations that the Federal Reserve will have to hike shortterm interest rates more quickly off their record low. That sent Treasury yields to their biggest gains in months.

Rising yields tend to be a drag on stocks, particularly those seen as the most expensive or whose expectations for big profit growth is furthest in the future. Drops for several high-growth tech stocks weighed on Wall Street, as did a slide in energy stocks following a decline in the price of crude oil.

The S&P 500 lost 38.54, or 0.8 percent, to 4,646.71 for its second straight drop. It’s coming off a strong run where it set a record high in each of the prior eight days.

The Dow Jones Industrial Average fell 240.04, or 0.7 percent, to 36,079.94. The Nasdaq composite, which has more tech stocks, dropped more. It lost 263.84, or 1.7 percent, to 15,662.71.

Worries about inflation stoked other areas of the market. Gold rose 1 percent and is close to its highest price since June. Bitcoin touched a record of nearly $68,991, according to Coindesk.

The center of Wall Street’s action, though, was in the bond market.

Investors are now pricing in a 66.5 percent chance that the Fed will raise rates by the end of June. A day earlier, that probability was at 50.9 percent.

This earnings season is wrapping up but several big names are still to come, particularly in the retail industry.