Wall Street stocks finished an ugly session with hefty losses Wednesday following US consumer inflation data that exacerbated worries about a sudden shift in monetary policy.

The Dow Jones Industrial Average dropped 2.0% to 33,587.66, losing around 680 points.

The broad-based S&P 500 fell 2.1% to 4,063.04, while the tech-rich Nasdaq Composite Index tumbled 2.7% to 13,031.68.

ALSO READ | Inflation hit US economy to add hurdles in US President Joe Biden’s economic plan

Worries about higher prices have been a theme among investors in recent weeks, at times prompting pullbacks. The fear is that a jump in prices will lead to a sudden tightening of Federal Reserve policy, jolting markets.

The Labor Department reported the Consumer Price Index (CPI) rose 4.2% last month compared to April 2020, far above expectations, according to Labor Department data.

A third of the month-on-month CPI increase was due to a 10 percent jump in prices of used cars and trucks. Airfares also rose significantly from March, another sign of recovery after pandemic-related weakness.

Art Hogan, chief market strategist at National Securities, said pricing in many of these areas should normalize once more supply becomes available.

ALSO READ | US consumer prices spike 4.2% last month from April 2020

“What happens, eventually, is high prices fix high prices,” Hogan said. “That just simply means that when prices get too high, there’s a supply response, and that supply response may take a while but it certainly will come.”

The Fed has said it views this jump in prices as transient and not requiring a shift in monetary policy.

But “the market is saying there’s no way the Fed can look at these numbers and not adjust monetary policy, in a timeframe that’s sooner than we anticipate,” Hogan said.