Dow tumbles 680 points in worst decline since January as hot inflation reading spooks investors

Investors have been fearful of a pick-up in inflation as it could squeeze margins and erode corporate profits. If price pressures run too hot for a sustained period of time, the Federal Reserve would be forced to tighten monetary policy.

“There are people who think the Fed is not just behind the curve, they’re maybe missing the point and by the time they start to play catch up, it’s too late,” Wall Street veteran Art Cashin said Wednesday on CNBC’s “Squawk on the Street.”

Tech shares, which have been under pressure this week and this month, led the decline again Wednesday as bond yields jumped. Shares of Microsoft, Netflix, Amazon and Apple all fell more than 2%, while Tesla slid over 4%. Alphabet dropped more than 3%.

Strength in energy shares, which could do well in an inflationary environment, provided the broader market with some cushion. Occidental Petroleum climbed 2.4%. Chevron and Marathon Oil gained slightly.

The Cboe Volatility Index , also known as Wall Street’s fear gauge, popped above 28 at its session high during Wednesday’s stock rout. The VIX is a measure of fear or expected volatility in the markets computed from option prices on the S&P 500.

The Technology Select Sector SPDR is off by 5.6% this week and 6%, as investors reassess the group’s high valuations in the face of rising inflation.

— CNBC’s Kevin Stankiewicz contributed reporting.

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