Dow tumbles day after rallying off ‘hot’ inflation report

US stocks tumbled Friday a day after shrugging off a “hot” inflation report and rebounding to recent highs.

The Dow Jones Industrial Average fell 395.05 points, or 4.61%, to 29,643.67. The S&P 500 fell 85.90 points, or 1.32%, to 3,584.01 and the Nasdaq Composite fell 327.76 points, or 3.08%, to 10,321.39.

The Labor Department reported Thursday that the consumer price index for the year to September showed inflation at 8.2%, near a 40-year high. Despite the “hot” report, shares rose on Thursday. The Dow shot up 827.87 points, or 2.83%, after initially falling 500 points after the report was released. It was one of the biggest turnarounds in recent years.

Still, the Federal Reserve reiterated on Thursday that further rate hikes to fight inflation are still likely. The Fed has hiked rates five times this year and analysts believe it will hike again at next month’s meeting. Reports show that the labor market is also still strong.

Stocks that fell on Friday include Apple (AAPL), which fell $4.61, or 3.22%, to $138.38. Tesla (TSLA) shares fell $16.73, or 7.55%, to $204.99.

“With core CPI still moving in the wrong direction and the labor market strong, the conditions are not in place for the Fed to turn monetary policy, which would be one of the conditions for a sustained equity market rally,” wrote UBS Global Wealth Management Chief Investment Officer Mark Haefele in a note to clients on Friday. “As inflation stays elevated longer and the Fed hikes further, there is a greater risk that the cumulative effect of monetary tightening will push the US economy into recession and undermine prospects for corporate earnings.” Dow tumbles day after rallying off ‘hot’ inflation report

Fry Electronics Team

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