Why the Stock Market Tanked After a Tame Inflation Report

The stock market had a tough day on Tuesday, and none of the major market benchmarks managed to survive the carnage. On a percentage basis, the Nasdaq Composite (NASDAQINDEX:^IXIC) and S&P 500 (SNPINDEX:^GSPC) had smaller losses than the Dow Jones Industrial Average (DJINDICES:^DJI), but small-cap stocks reacted even more negatively.


Percentage Change

Point Change




S&P 500






Data source: Yahoo! Finance.

One key number the market has been looking forward to is August’s reading on consumer prices. After several months of high inflation numbers, economists were hopeful that the latest data would present a more benign picture. Yet even a lower-than-expected reading on the Consumer Price Index wasn’t enough to calm nerves among investors.

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