At a Glance
- The Dow Jones sank 400 points in a broad sell-off
- All 11 S&P 500 sectors finished deep in the red
- Apple, Microsoft and Tesla led mega-cap losses
- Why it matters: Investors dumped stocks amid fears that sticky inflation will keep the Fed hawkish longer
Stocks crashed Tuesday as hotter-than-expected inflation data forced traders to price out hopes for a June rate cut. The Dow Jones Industrial Average fell 400 points, or 1.2%, while the S&P 500 slid 1.4% and the Nasdaq dropped 1.4%.
Inflation Shock Sparks Selloff
The Labor Department reported that consumer prices rose 3.5% in March from a year earlier, the fastest pace since September and above forecasts for 3.4%. Core inflation, which strips out food and energy, also accelerated to 3.8%, dashing expectations for a cooldown.
Bond yields spiked on the data. The 10-year Treasury yield jumped 18 basis points to 4.55%, its highest level since November. Traders now see less than a 50% chance the Federal Reserve will cut rates at its June meeting, down from 70% before the report.
Every Sector Falls
Energy, Materials and Tech bore the brunt of the rout. The Energy Select Sector SPDR fell 2.8%, while the Materials Select Sector SPDR lost 2.5%. Even defensive groups like Utilities and Consumer Staples finished down more than 1%.
Apple tumbled 2.4%, Microsoft slid 2.6% and Tesla crashed 4.9%. All 30 Dow components ended lower, with 3M and Caterpillar each off more than 3%.
Small-Caps Hit Hardest
The Russell 2000 small-cap index plunged 2.8%, underperforming large caps. Small banks led the decline after New York Community Bancorp warned of credit troubles; its shares crashed 15% and dragged the Regional Banking ETF down 3.5%.
Dollar, Gold Diverge
The U.S. Dollar Index jumped 1.1% to a five-month high as traders bet the Fed will out-hike other central banks. Gold, which had rallied to a record $2,365 an ounce Monday, fell 0.9% as real yields climbed.
Volume Explodes
NYSE volume surged 25% above its 20-day average, while Nasdaq volume rose 20%, indicating heavy institutional selling. Fear spiked: the CBOE Volatility Index leapt 22% to 19.2, its highest close since late October.
What News Of Los Angeles Says
“The inflation data was a clear setback for the Fed,” Olivia M. Hartwell noted. “Markets are now repricing the policy path, and stocks are paying the price.”
Key Takeaways
- Sticky inflation torpedoed the rate-cut narrative
- Tech megacaps led the market lower
- Small-caps and regional banks were the worst performers
- Bond yields and the dollar surged, while gold retreated
