US stocks slump as investors digest inflation data showing prices surged in June

Stock trader worried

US stocks fell Tuesday after inflation data showed prices rose more than expected in June.

The Consumer Price Index increased 0.9% in June, far higher than Bloomberg’s consensus estimate among economists of 0.5%. The reading marked the largest one-month change since June 2008.

On a year-over-year basis, prices increased 5.4%, higher than economists’ expectations for a 4.9% year-over-year increase. However, June 2020 was the lowest point for Core CPI during the pandemic shutdown, so year-over-year increases are expected.

Here’s where US indexes stood at the 4 p.m. ET close on Tuesday:

Mike Lowengart, E*Trade Financial managing director of investment strategy, said that the real question on investors’ minds after the CPI read is how long hot inflation numbers will last.

“Transitory has been the buzzword when it comes to inflation but it’s a tricky phrase. Does it mean a few months, a year, or even longer? Every successive high inflation read will make it harder and harder for the Fed to remain accommodative. And on the markets front, we may experience a bit of a tug of war as traders balance the economic data with strong bank earnings beginning to roll in,” he said.

Elsewhere in markets, Amazon, Apple, Alphabet, and Microsoft all hit record intraday highs today. The stalwarts are helping propel the S&P 500 to new all-time highs.

The benchmark index has notched 39 record closing highs through Monday’s session, according to Bespoke Investment Group. If it keeps up its current pace, it could close out 2021 with 74 record closing highs, the second-most of all time, Bespoke said.

The yield on the US 10-year Treasury gained 4.7 basis points to 1.41%.

Bank earnings began this morning, with JPMorgan and Goldman Sachs beating expectations.

West Texas Intermediate crude gained 1.58% to $75.27 per barrel. Brent crude, oil’s international benchmark, climbed 1.77%, to $76.49 per barrel.

Gold was flat at $1,807.2 per ounce.

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