Stocks dropped in early morning trade on Wednesday as investors reacted to another hotter-than-expected monthly inflation report. The Dow Jones Industrial Average dropped over 200 points, while the S&P 500 and Nasdaq Composite fell about 0.5% and 0.15%, respectively.
In June, headline inflation rose 9.1%, according the the Bureau of Labor Statistics' Consumer Price Index (CPI) report on Wednesday, well above Wall Street estimates for an 8.8% increase in prices and marking the highest rise since November 1981. In May, CPI rose 8.6% in a 40-year high.
So-called core CPI, which excludes more volatile food and energy prices, rose by a more than expected 5.9% in June. However, this reading was a slight declaration from May's 6.0% reading.
"Overall, this report confirms that the Fed will need to hike by 75 [basis points] again at the end-July meeting," Capital Economics Senior U.S. Economist Michael Pearce said on Wednesday, quoted by Yahoo!Finance. "While some will draw parallels with the shockingly bad May CPI report, the backdrop is markedly different commodity prices have fallen sharply and we've seen clearer signs of an economic slowdown, both of which will contribute to weaker price pressures ahead."
Beyond the inflation report, investors are also assessing the health of the U.S. economy as the second quarter earnings season begins this week. Delta Air Lines
Investors will be looking for how inflation and higher interest rates are affecting big banks like JPMorgan Chase
Here's how the market settled on Wednesday:
S&P 500 Index
Dow Jones Industrial Average
Nasdaq Composite Index
Google/Alphabet plans to slow hiring through 2023:
Google
"Like all companies, we're not immune to economic headwinds," Pichai wrote in a memo, quoted by CNBC. "We need to be more entrepreneurial working with greater urgency, sharper focus, and more hunger than we've shown on sunnier days."
The tech industry has taken a beating in recent months as investors rotate out of growth names as they brace for a possible upcoming recession. So far this year, Alphabet shares are down more than 23%.
Growth in the first quarter slowed more than 23% from a year earlier, according to the company's recent earnings report. Still, Pichai said that Alphabet has hired 10,000 employees in the second quarter.
"Because of the hiring progress achieved so far this year, we'll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities," he wrote, quoted by CNBC. "For the balance of 2022 and 2023, the company will focus on hiring on engineering, technical and other critical roles."