U.S. stocks nosedived Tuesday after a surprising inflation report showed prices rose more than expected last month.
Technology stocks led the way down, with the Nasdaq Composite plunging 4%. The S&P 500 sank 3%, and the Dow Jones Industrial Average erased 870 points, or 2.7%.
The Bureau of Labor Statistics released the Consumer Price Index (CPI) for August early Tuesday, which showed prices rose 8.3% over the prior year and 0.1% over the prior month. Economists had expected an 8.1% increase in inflation over last year and a decline of 0.1% over the prior month.
This reading marks some moderation in price increases — which reached four-decade highs earlier this year — but this smaller-than-expected decline likely clinches another 0.75% rate hike from the Federal Reserve at its policy meeting next week.
On a “core” basis, which excludes the more volatile costs of food and energy, prices rose 6.3% over last year in August and 0.3% over the prior month. Much of the steady rise in core…