Wall Street skids on inflation fears; USD, bond yields jump

 Wall Street skids on inflation fears; USD, bond yields jump

U.S. stocks suffered the biggest slump in at least 11 weeks on Wednesday and benchmark Treasury yields jumped after data showed consumer prices in April unexpectedly rose by the highest level in nearly 12 years, prompting bets on earlier interest rate hikes.

A 0.8% jump in the U.S. consumer price index – outpacing a 0.2% forecast – boosted the U.S. dollar as expectations of rising real interest rates burnished the currency’s appeal. read more

The gyrations in financial markets underscored concerns among some investors that the Federal Reserve could be wrong in its prediction that inflation pressures in the United States are temporary, and that the central bank may have to raise rates sooner than it expects.

The prospect of tighter monetary policy knocked shares lower and the stock market steadily extended losses through the day. The Dow Jones Industrial Average (.DJI) shed 2%, the S&P 500 (.SPX) dropped 2.1%, and the Nasdaq Composite…

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