U.S. stocks tumble on red-hot inflation

U.S. stocks posted heavy losses on Thursday due to higher-than-expected inflation in January and expectations for more aggressive monetary tightening.

The Dow Jones Industrial Average was down 526.47 points, or 1.47 percent, to 35,241.59. The S&P 500 fell 83.10 points, or 1.81 percent, to 4,504.08. The Nasdaq Composite Index fell 304.73 points, or 2.10 percent, to 14,185.64.

All the 11 primary S&P 500 sectors ended in red, with real estate and technology down 2.86 percent and 2.75 percent, respectively, leading the losses.

Yields on U.S. 2 Year Treasury Note shot up 22.9 basis points, ending at 1.587 percent. Meanwhile, yields on U.S. 10 Year Treasury Note topped 2 percent, the highest level since August 2019.

U.S. stocks finished broadly lower on Thursday as another hotter-than-expected inflation reading further fueled expectations for aggressive monetary policy tightening from the Federal Reserve, said a note by U.S. financial services firm Wells Fargo Advisors.

U.S. consumer price index (CPI) for January grew 7.5 percent year-on-year, higher than the 7.3-percent consensus of market forecasts, and the highest since 1982.

There was price strength everywhere with household furniture, apparel and used cars leading in goods as well as rents and medical firms leading in services, said a research note by the Global Research organization at Bank of America on Thursday.

"For the Fed, this report provides another wake-up call. Inflation is here and it continues to make its presence known everywhere," it said.

The Fed will hike the benchmark interest rate seven times in 2022, beginning at the next meeting of the Federal Open Market Committee in March, it added.

According to the FedWatch Tool by U.S. global markets company CME Group, the Fed now has a 94.7-percent probability of raising the benchmark interest rate by 50 basis points in the meeting in March, up from 24 percent of such probability on Wednesday.