While bond yields climbed sharply, the Dow Jones index lost 1.16%, the S&P 500 index dropped 1.34% and the technology-dominated Nasdaq plunged 1.75%, around 3:00 p.m. GMT.

Inflation in the United States, measured by the PCE index favored by the American central bank (Fed), stood at 5.4% over one year in January against 5.3% the month before.

Over one month, it accelerated to 0.6% against 0.2% in December, while analysts were expecting +0.4%.

Even without food and energy, core inflation is on an upward trend (+0.6%).

"This surprisingly strong increase (...) is a further sign that the Fed will have to maintain a tighter monetary policy for longer," commented Paul Ashworth, economist at Capital Economics.

The day before, after four sessions of decline, Wall Street had attempted a modest rebound taking advantage of a lull in rates and good results in technology.

The Dow Jones rose 0.33% to 33,153.91 points, the Nasdaq gained 0.72% to 11,590.40 points and the S&P 500 gained 0.53% to 4,012.32 points.

But on Thursday, weighing on equities, bond yields stretched sharply.

Those on ten-year Treasury bills rose again to 3.95% against 3.87% the day before and those to two years, even more sensitive to the evolution of Fed rates, gained 10 percentage points to 4.80 %, at a peak since 2007.

The dollar, benefiting from this prospect of higher rates for longer, swelled by more than half a percentage point against the major currencies.

"What should be remembered is that there is no disinflation", judged Patrick O'Hare of Briefing.com, thus implicitly recalling the optimistic remarks of the boss of the Fed Jerome Powell at the end of the last monetary meeting evoking a "disinflation".

On the contrary, there is "inflation which remains sticky" and which will "lead the Fed to maintain high rates longer than the market thought", also added Mr. O'Hare.

Other factors weighed on Wall Street, which at this rate was preparing to end its worst week since early December for the Nasdaq and the S&P 500.

Boeing, one of the heavyweights of the Dow Jones, fell by 3.93%.

The aircraft manufacturer has again suspended the delivery of its long-haul 787 aircraft, already interrupted for several months in 2021 and 2022 for poor workmanship, in order to analyze a fuselage element more closely.

Investor sentiment was also clouded by geopolitical tensions with the war in Ukraine entering its second year and the planned dispatch to Taiwan -- reported in the press -- of new US troops to help with military training.

The decline in prices affected all sectors.

Nasdaq megacaps lost around 2%, from Amazon to Apple via Meta and Microsoft.

Tesla dropped 3.83%.

Nvidia shares, which had carried the market the day before, soaring 14% after optimistic projections linked to the development of artificial intelligence, returned 2.59%.

Investors flocked to Beyond Meat (+27%) as the meat-substitute steak specialist reported a lower-than-expected quarterly loss and better, albeit declining, sales.

Struggling online car seller Carvana fell more than 17% after an increase in its losses in 2022 to 1.6 billion.

On the bright side, consumers were in better spirits in February, according to the University of Michigan confidence index.

© 2023 AFP