US stocks drop as CPI runs hot, pointing to rate spike

US stocks tumbled, with the Dow down more than 700 points near 2.40pm in New York, as faster-than-expected inflation opens the door wider to higher interest rates.

Traders see 50-50 odds of the Federal Reserve raising rates by three-quarters of a percentage point in July, while economists at Barclays and Jefferies say this move could come as early as next week. The University of Michigan’s preliminary June sentiment index fell to 50.2, from 58.4 in May, data released Friday showed. The figure was weaker than all estimates in a Bloomberg survey of economists which had a median forecast of 58.1.AUD -0.7% to 70.51 US centsP 500 -2.25% Nasdaq -3.03%In Europe: Stoxx 50 -3.4% FTSE -2.1% CAC -2.7% DAX -3.1%Iron ore -1.6% to $US141.55 a tonneUnited States

The brokerage also lowered its ratings on e-commerce platform eBay and online gaming firm Roblox to “sell” from “neutral”.Netflix is now a “show-me story”, Goldman said, as it cut revenue estimates for 2022-2023.European shares slumped 2.7 per cent on Friday. Losses on the pan-European STOXX 600 index were broad-based, led by a 4.8 per cent slide in banks.

Italy’s MIB index sank 5.2 per cent to three-month lows. Spain’s IBEX gave up 3.7 per cent, while other major bourses in the region lost more than 2 per cent each.Investors pulled out money from European equity funds in the week to Wednesday, marking the 17th consecutive week of outflows, due to uncertainties related to the Russia-Ukraine war, BofA said.

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