MARKET REVIEW. The New York Stock Exchange fell sharply on Wednesday as the market worried that the US economy was overheating after April inflation figures were higher than expected.

The Toronto Stock Exchange also fell, dragged down by the materials and information technology sectors.

The clues

In Toronto, the S & P / TSX index fell 166 points, or 0.86%, to 19,107 points.

In New York, the S&P 500 fell 89 points, or 2.14%, to 4,063 points, its largest decline since February.

The Dow Jones lost 681 points, or 1.99%, to 33,587 points.

The Nasdaq fell 357 points, or 2.67%, to 13,031 points.

The context

Inflation, measured by the CPI consumer price index, hit 0.8% in April, on a month-to-month basis, according to the Labor Department. Over twelve months, the price increase reached 4.2%, the highest in 13 years.

This figure surprised analysts who expected a more modest rise in prices for the month, of only 0.2%.

It raises questions about an adjustment in the ultra-accommodating monetary policy of the Federal Reserve (Fed), which has supported the US economy since the start of the pandemic thanks to low key rates and a vast asset buyback program.

“Even if the Fed repeats over and over again that it is ready to let inflation rise, believing that this jump is temporary, the market has let it be known today that it does not believe this message,” said Art Hogan of National Holdings.

The expert also underlines that galloping and uncontrolled inflation could ultimately have a negative impact on the income and profits of listed companies.

Symbol of this fear of a too rapid rise in prices, the 10-year rate on the American debt, which moves in the opposite direction to the price of bonds, climbed and stood at the end of the day at 1.70% against 1, 62% the night before.

Among the values ​​of the day, the American video game giant Electronic Arts lost 1.79% despite better-than-expected quarterly results and optimistic forecasts for the year as a whole.

Amazon lost 2.23%, pulled down like the other American tech pillars. The e-commerce giant, however, obtained an important victory on Wednesday against the European Commission after the European Court of Justice validated the tax rebates obtained by the group in Luxembourg.