Stock-Market Tumble Shows Investors Now Face "Fed's Reality" in Inflation Fight
Dow, S&P 500 and Nasdaq see biggest CPI-day fall since September 2022. A frothy stock market suffered a steep fall Tuesday, as an unexpectedly hot January consumer-price index reading reminded investors that the Federal Reserve's long-fought battle against inflation isn't yet won."The markets just went too far, too fast and the Fed's reality is setting in right now," said Kent Engelke, chief economic strategist and managing director at Capitol Securities Management, in a phone interview.Reality can be painful. The Dow Jones Industrial Average DJIA dropped nearly 760 points at its low and ended the day down roughly 525 points, or 1.4%. The S&P 500 SPX tumbled 1.4%, while the Nasdaq Composite COMP shed 1.8%.Some observers worried that further rounds of stubborn inflation data could force the Fed - which has so far signaled that it's next move will be a rate cut - and investors to change their tune altogether.