US stocks sank the most in three weeks, and Treasury yields spiked high after an unexpectedly hot reading in consumer prices fuelled bets that the Federal Reserve will have to scale up its battle against inflation. The S&P 500 fell 2.9 per cent, closing out the second-worst week in 2022 and the ninth weekly drop in the past ten years, as fears started mounting that efforts to combat inflation risk stifling growth.
Tech shares bore the brunt of Friday’s misfortunes, with the Nasdaq 100 tumbling more than three per cent. Growth stocks from Cathie Wood’s flagship ETF to software developers and chipmakers plunged to a record low. A separate report showed US consumer sentiment had dropped in early June to a record, adding to pressure on shares of casinos, airlines, and hotels.
In the Treasury market, two-year yields topped three per cent, a level not seen since 2008, while the move in short rates left 30-year yields below those on five-year notes, signaling the risk that tightening will slow growth. Bitcoin slid back below US$30,000; the Cboe Volatility Index surged to 29, and the dollar advanced.
