Standard & Poor's 500 dropped 89.06 points (2.14%) to 4063.04 points.
The Nasdaq Composite lost 357.75 points (2.67%) to 13031.68 points.
Consumer prices (CPI) in the US jumped 4.2% in April from the same month last year, according to data from the country's Labor Department released on Wednesday. Thus, inflation accelerated from 2.6% in March and reached its highest rate in more than 12 years, since September 2008. Analysts on average had forecast a 3.6% rise.
The CPI index in April increased by 0.8% versus the previous month. This is a record rise since June 2009. Experts had expected an increase of just 0.2%. In March, the indicator increased by 0.6%.
Speaking at an event hosted by the National Association for Business Economics (NABE) in Washington, Federal Reserve Deputy Chairman Richard Clarida said he was surprised by the latest inflation data. If demand continues to exceed supply and inflation rises above the Fed's 2% target, the regulator will take immediate action. However, he expects the rise in consumer prices amid renewed economic activity will be temporary.
Signs of increased inflation in the US have put pressure on the market this week, Dow Jones writes. Investors fear that the Fed may raise short-term interest rates earlier than planned to curb inflation. At the same time, according to a number of representatives of the American Central Bank, the economy still needs support from low rates.
Fed Governor Leil Brainard said on Tuesday that despite the good outlook for the US economy, the Fed is still far from meeting employment and inflation targets, so a patient approach to monetary policy is needed.
"The outlook is good, but risks remain and we are far from meeting our goals," Brainard said at a press conference. "When the economy is fully open and the recovery picks up steam, it will be important to continue to patiently focus on achieving maximum employment and targeting inflation." ...
A similar view was expressed by the chairman of the Federal Reserve Bank (FRB) of Philadelphia, Patrick Harker, who spoke at a separate event on Tuesday: "While the economy is improving, the recovery is still ongoing, and there is no reason to roll back support."
Atlanta Fed Chairman Rafael Bostic on Tuesday also spoke out in support of loose monetary policy, stating the need to "keep rates low and be actively involved in efforts to stimulate economic activity."
The leaders of the fall on Wednesday were the shares of technology companies. Microsoft Corp., Amazon.com Inc. and Apple Inc. decreased by more than 2%. Tesla Inc. fell more than 4%, Alphabet Inc. fell in price by more than 3%.
At the same time, shares in the energy sector rose in price amid rising oil prices, providing some support to the market. Occidental Petroleum Corp. rose 2.4%, Chevron Corp. and Marathon Oil Corp. added 0.6% and 0.4%, respectively.
Shares of American Electronic Arts Inc. fell in price by 1.2%. One of the world's leading PC game manufacturers cut its fiscal fourth quarter net income and gave a weak outlook for the year.
The market value of the American insurance startup Lemonade Inc. fell by 18.5%. The company's financial results exceeded market expectations, but it gave a disappointing forecast for the current quarter.
TransUnion capitalization decreased by 1.8%. US credit bureau TransUnion increased its quarterly dividend by 27% to 9.5 cents per share from 7.5 cents.
FuboTV Inc. jumped 9.7%. The company, which offers a platform for live sporting events, more than doubled its revenue in the first quarter and improved its forecast.
