Don't Let Inflation Hype Scare You Out of the Stock Market
The stock market suffered another big drop on Wednesday, with economic data coming to the forefront of investors' minds. News that consumer prices rose 0.8% in April stoked fears of uncontrolled inflation that could prompt the Federal Reserve to take drastic action that would endanger the economic recovery. That sent the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) all down in unison.
As nasty as today's drop looked, though, the reality isn't that bad. Below, we'll look more closely at the inflation numbers and why the market's drop might well have been an overhyped reaction to conditions that are unlikely to persist.
Stock markets lost ground gradually throughout the day and closed at their worst levels of the session. Losses for small-cap stocks were even steeper, with the Russell 2000 index falling more than 3%.
Source Fool.com
