US stocks drop to their worst day since July as inflation worsens

US stocks dropped to their worst day since July on Wednesday, following the latest signal that inflation is getting worse.

The S&P 500 sank 1.1 per cent for a fifth loss in the six days since setting its all-time high. The Dow Jones Industrial Average fell 48 points, or 0.1 per cent, and the Nasdaq composite slid 1.9 per cent as stocks in the artificial-intelligence industry led the way lower.

Stocks felt pressure from rising yields in the bond market, where worries grew after a report said US consumers had to pay prices for fuel, food and other costs of living last month that were 3.7 per cent higher overall than a year earlier.

That means inflation accelerated from its 3.4 per cent rate in August and was worse than the 3.6 per cent that economists expected.