Market Jitters: Inflation, Tariffs, and the Fed's Next Move

U.S. stock markets took a tumble on Thursday as new data pointed to rising inflation, curbing hopes for Federal Reserve interest-rate cuts this year. The Labor Department's report showed a significant spike in producer prices for July, suggesting inflation pressures could intensify across goods and services.

Investors reacted swiftly, trimming expectations for rate cuts by the Fed. Current projections are for a 56.7 basis point reduction for the year, down from 63 basis points prior to the report. Analysts warn that the Fed's approach to rate adjustments may be less accommodative than anticipated.

Concern grows that U.S. import tariffs might elevate prices, potentially disrupting stock rallies. From technology to materials, numerous sectors saw declines, with earnings forecasts drawing scrutiny. Notably, Deere & Co and Tapestry reported weaker earnings, citing adverse tariff impacts on their performance.

(With inputs from agencies.)