Finder makes money from featured partners, but editorial opinions are our own.

The S&P 500 just had its worst day since June 2020 – here’s why


Wall street has effectively given back the week's gains after inflation figures remain stumblingly high.

Yesterday's optimism was quickly forgotten with the US markets having their steepest sell-off in 2 years, following the latest inflation figures.

Investors were optimistic the worst could be over.

Instead, the S&P 500 dropped 4.32% to 3,923 and the Nasdaq Composite sank 5.16%.

Just 6 stocks in the S&P 500 closed in positive territory.

The pain was also felt on the FTSE which fell 1.17% overnight.

The Australian futures market fell 2.27% before the opening.

Why the sudden crash?

Like most things in investing in 2022, it can be summed up in 1 word.


Consumer price index (CPI) in the US increased by 0.1% in August. Figures from the US Department of Labor show that any relief in fuel prices was short-lived.

In fact, higher prices on food and rent meant inflation rose.

This went against market expectations which were predicting a fall in oil prices and the US dollar meant inflation was peaking.

As such in the lead-up, the market was aggressively buying.

"Markets rallied this summer as investors mistakenly connected the inflation peak with a likelihood that the Fed would soon wrap its monetary hiking cycle," says Principal Global Investors chief global strategist Seema Shah.

"Instead, the Fed has remained steadfast in not letting a deteriorating economy get in the way of additional monetary tightening – sending the summer rally into reverse," Shah added.

What's next?

If the market wasn't on Fed watch before it certainly will be today.

Widely predicted to have short-term pain in September with a 75-basis-point rise, the pace of future rate rises was predicted to slow.

This has now all changed.

Investors will be looking for signs the worst of inflation is over.

Positive commentary could see the relief rally continue while negative signs will likely see another market pull-back.

Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances and obtain your own advice before making any trades.

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms Of Service and Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site