A broad-based selloff sent equities to their worst day in more than two years after hotter-than-expected inflation data fueled bets on a jumbo hike by the Federal Reserve next week. Treasury yields surged and the dollar gained.
Across the board selling sent the S&P 500 down more than 4%, while the tech-heavy Nasdaq 100 losses surpassed 5% as yield-sensitive stocks took the biggest hit. Both benchmarks suffered their worst one-day routs since 2020. Swaps traders are now fully pricing in a rate increase of three-quarters of a percentage point, with wagers rising for a similar move in November and policy rates ultimately reaching around 4.3% early in 2023.