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US stocks stumbled on Wednesday after a key inflation report showed an unexpected uptick in consumer prices last month.

The Dow Jones Industrial Average (^DJI) fell over 1.4%, or more than 500 points, while the S&P 500 (^GSPC) dropped about 1.3%. The tech-heavy Nasdaq Composite (^IXIC) was down about 1.2%.

Meanwhile, bond yields soared. The 10-year Treasury yield (^TNX) gained as much as 20 basis points on Wednesday afternoon, hitting nearly 4.57%, its highest level since November 2023.

The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.5% over the prior year in March, an acceleration from February’s 3.2% annual gain in prices.

Both measures came in ahead of economist forecasts of a 0.3% month-over-month increase and a 3.4% annual increase, according to a survey by Bloomberg.

The hotter-than-expected print could prompt investors to expect fewer rate cuts from the Fed this year. According to the CME FedWatch tool, around 80% of bets are now on the Fed holding steady at current rate levels in June. More than half of investors also expect the central bank to leave the rate unchanged through its July meeting.

Also out Wednesday the latest minutes from the Federal Reserve’s latest policy meeting showed “almost all” officials believed it would be appropriate to lower interest rates “at some point.”

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