Wall Street had its worst day since June 2020 on Tuesday as the inflation reading was hotter than expected.
The Dow dropped more than 1,250 points, the Associated Press reported. According to the New York Times, U.S. government bond yields "soared" on Tuesday after new data showed that bets made by investors on how persistent inflation would be were proven wrong and saw investors be undercut in their predictions.
The S&P 500 was trading higher before the data was released but saw a 4.3 percent slump by the end of Tuesday trading.
Reports of faster-than-expected inflation data showed that investors were caught off guard. There is still lingering uncertainty about how much more the Federal Reserve will need to raise interest rates.
If the Fed raises rates again, it will make borrowing more expensive for consumers and companies.
The Nasdaq Composite stock index saw its worse day since June 2020 as it fell 5.2 percent. The index is loaded with tech stocks which are more sensitive to rising interest rates, the New York Times reported.