Wall Street and global stocks slumped further on Friday, with government bond yields and the dollar holding near recent peaks, as higher-than-expected inflation capped a nasty third quarter for world markets.
Fresh personal consumption expenditures (PCE) price index data, tracked by the U.S. Federal Reserve as it considers more interest rate hikes, showed a rise of 0.3% last month after dipping 0.1% in July. Euro zone inflation also hit a record high of 10% in September, surpassing forecasts, flash inflation data showed.
Fed Vice Chair Lael Brainard said the U.S. central bank would need to maintain higher interest rates for some time as part of its effort to tame inflation and must guard against lowering rates prematurely.
Quincy Krosby, chief global strategist for LPL Financial in Charlottesville, Virginia, said the new price index data “did little to assuage fears that the campaign to curtail inflation is working as quickly as hoped by the market.”
All three major Wall Street indexes finished down around 1.5% after a day of choppy trading.