North American markets tumble, with U.S. stocks posting worst drop since June 2020

The S&P/TSX composite index was down 341.83 points at 19,645.40.

North American markets tumbled Tuesday after the latest reading on U.S. inflation disappointed traders, with Canada’s main stock index down more than 300 points and all three major U.S. stock indexes suffering their worst day since June 2020.

The S&P/TSX composite index was down 341.83 points at 19,645.40.

In New York, the Dow Jones industrial average was down 1,276.37 points at 31,104.97. The S&P 500 index was down 177.72 points at 3,932.69, while the Nasdaq composite was down 632.84 points at 11,633.57.

The sell-off ended a four-day winning streak for the major U.S. stock indexes.

Bond prices also fell sharply, sending their yields higher, after the latest U.S. Consumer Price Index report showed inflation decelerated only to 8.3 per cent in August, instead of the 8.1 per cent economists expected.

As a result, odds are increasing that the U.S. Federal Reserve will raise its key interest rate next week by a full percentage point, but three-quarters of a percentage point continues to be the more likely outcome, CIBC’s Executive Director of Institutional Equity Research Sid Mokhtari said.

But if the central bank does hike a full percentage point next week, the markets could get rocky.

“That’s a big surprise, to be fair with you. And I think that’s where we go right back to the (market) lows we had in the summertime,” he said.