US stocks drop toward their worst day since July as inflation worsens

stocks dropped to their worst day since July. The S&P 500 fell 1.1% Wednesday and had its fifth loss in the six days since setting its all-time high. The Dow Jones Industrial Average slipped 0.1%, and the Nasdaq composite sank 1.9%.

A report showing inflation accelerated last month raised expectations on Wall Street that the Federal Reserve will raise interest rates. More expensive borrowing could slow the buildout of AI data centers, and AI stocks were the heaviest weights on the market. Bank of America sank after reporting a weaker profit than analysts expected.THIS IS A BREAKING NEWS UPDATE.

AP’s earlier story follows below.NEW YORK (AP) — U.S. stocks are dropping toward their worst day since July on Wednesday following the latest signal that inflation is getting worse.The S&P 500 fell 1.3% and was on track for a fifth loss in the six days since setting its all-time high. The Dow Jones Industrial Average was down 209 points, or 0.4%, with an hour remaining in trading, and the Nasdaq composite was 2.1% lower because stocks in the artificial-intelligence industry led the way.Stocks felt pressure from rising yields in the bond market, where worries grew after a report said U.S.

consumers had to pay prices for fuel, food and other costs of living last month that were 3.7% higher overall than a year earlier. That means inflation accelerated from its 3.4% rate in August and was worse than the 3.6% that economists expected.Inflation has remained more painful than anyone would like since the economy catapulted out of the crevasse created by the COVID-19 pandemic. It’s accelerated recently in part because of jumps in fuel prices caused by the war with Iran, and the price for a barrel of Brent crude added 0.4% Wednesday to $106.06.That has added to the longstanding worries about fast-rising debt loads for governments, signals that the U.S.

economy is still growing and other factors that have sent bond yields to their highest levels in years worldwide.The centerpiece of the U.S. bond market, the 10-year Treasury, saw its yield briefly jump above 5.32% from less than 5.17% just before the inflation report’s release. It eventually gave back much of the gain.Yields on shorter-term Treasurys had even bigger leaps as traders raised their expectations for coming hikes to interest rates by the Federal Reserve, though they also …

Higher rates do that by making it more expensive for everyone to borrow money and slowing the overall economy.Traders now see a nearly 35% chance the Fed will raise the federal funds rate at its next meeting in two weeks, up from the 22% probability seen just a day earlier, according to data from CME Group.Part of what’s keeping inflation high is that Americans overall are continuing to spend, which encourages businesses to keep raising prices for their products and services. NEW YORK (AP) — Worries about worsening inflation are weighing on Wall Street Wednesday and pulling the U.S. stock market further from its record.The S&P 500 dropped 1.1% and was on track for a fifth loss in the six days since setting its all-time high.