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✓The Dow Jones Industrial Average sank nearly 4%, the S&P 500 dropped 4.3%, and the Nasdaq plunged more than 5%.
✓It marked the steepest day of declines since June 2020.
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The Fed is widely expected to announce another large increase this month, a move analysts said was all but confirmed by latest report. But big rate increases also raise the risk of recession as the economy slows.
"Investors should brace themselves for even higher rates than they anticipated before today's release," said Ronald Temple, managing director, co-head of multi-asset and head of US equity at Lazard Asset Management.
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"Despite the sharpest tightening of monetary policy in decades, the Fed still has more heavy lifting ahead."
Posted: 1 hour ago
Inflation in the US remained unexpectedly high last month, news that drove Wall Street to its worst day in more than two years.
The annual inflation rate, the pace at which prices rise, slipped to 8.3% in August, the Labor Department said.
That was down from 8.5% in July, driven by lower petrol costs.
But the costs of food, housing and medical care continued to surge, disappointing investors hoping for more widespread easing.
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The Dow Jones Industrial Average sank nearly 4%, the S&P 500 dropped 4.3%, and the Nasdaq plunged more than 5%.
It marked the steepest day of declines since June 2020.
For US President Joe Biden, whose approval ratings fell below 40% earlier this year amid cost of living concerns, the report was also a troubling sign ahead of the national elections in November. They will determine whether Mr Biden's Democrats maintain their slim control of Congress.
While Mr Biden's ratings have recovered slightly in recent weeks as petrol prices have subsided, the issue remains "a huge problem", said pollster Chris Jackson.
For a president with approval ratings like Mr Biden's to see his party pick up seats in the mid-terms would be unprecedented, he added.
"Americans have been telling us for months now that it's the number one concern they have and, rightly or wrongly, they blame whoever's running the country for that," said Mr Jackson, senior vice president at the Ipsos polling firm.
Inflation in the US peaked at 9.1% in June, the fastest increase seen since the early 1980s. It fell to 8.5% in July, as petrol prices fell, easing again last month.
In a statement on Tuesday, Mr Biden focused on the improvement, saying: "Overall, prices have been essentially flat in our country these last two months: that is welcome news for American families, with more work still to do."
But money worries remain at the forefront of many consumers' minds..."
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