US stocks open sharply lower after CPI data

Wall Street stocks dropped and short-dated Treasuries came under pressure on Wednesday after hotter than expected US inflation data fueled expectations of aggressive Federal Reserve rate hikes.

US stocks opened sharply lower after the Consumer Price Index reading in June showed inflation surged in June more than expected, with the annual rate climbing to a nearly 41-year high of 9.1%.

The US Bureau of Labour Statistics said Wednesday that the consumer-price index rose 1.3% in June, bringing the inflation rate over the past year to 9.1%. Economists polled by the Wall Street Journal forecast the CPI data would show a monthly rise of 1.1%.

The broad-based S&P 500 index was down 0.4 per cent by the early afternoon in New York, trimming steeper declines immediately after the inflation report. The technology-focused Nasdaq Composite dropped 0.3 per cent. The S&P has lost 20 per cent so far this year. The Dow Jones Industrial Average DJIA –0.16%  has declined 182 points, or 0.6%.

The annual rate of US consumer price inflation hit 9.1 per cent last month, data on Wednesday showed, exceeding consensus estimates for an 8.8 per cent increase. The month-on-month rise was 1.3 per cent, up from 1 per cent in May.