‘Straightforward Bad’: Stock Investors React to Inflation Report

So much for peak inflation.

US consumer prices surged to a 40-year high, defying expectations that gains would start to moderate after the Federal Reserve began tightening. Stocks sank, short-dated Treasury yields spiked and the dollar jumped on Friday as traders priced in three straight Fed rate increases of 50 basis points each.

The jaw-dropping data -- an annual rate of price gains that hit 8.6% last month -- drew instant reaction across Wall Street.

Here is what some traders and strategists are saying:

Michael Darda, chief economist and market strategist at MKM Partners, said on Bloomberg TV and Radio:

“We’re probably pretty close to peak inflation on a year-over-year basis, but none of that may matter for the path of Fed tightening, and the bond market and equity-market valuations. Because if inflation eases from here but still stays very high, then that is not an environment where the Fed just moves to the sidelines and we see some kind of huge revaluation in expensive equities that dominate the market cap of the S&P 500.”