Dow tumbles as inflation reading triggers market shock waves: What investors need to know
From Wall Street to Main Street, fears that the U.S. economy could be sliding into 1970s-style “stagflation” have been percolating.
References to the sticky situation appeared in news headlines all week. The Associated Press called it “the dreaded ‘S’ word.” The Wall Street Journal reminded readers of the neologism’s origins as a catchy way to describe an environment of slowing or stagnant economic growth, jobs losses, plus inflation.
The World Bank also evoked it when warning on Tuesday about a “protracted period of feeble growth and elevated inflation,” while announcing that it had just cut its outlook for global economic growth by nearly a full percentage point.
Then things really came to a head on Friday. The May reading of the U.S. consumer-price index — a closely followed gauge of price pressures in the economy — deflated hopes on Wall Street, and in Washington, D.C., that inflation had already…
