U.S. stocks dropped to their worst day since July on Wednesday after a report showed inflation accelerating. The S&P 500 sank 1.1%, falling 86.51 points to 7,718.94 — its fifth loss in the six days since setting an all-time high.

The Dow Jones Industrial Average dipped 48.62 points to 51,621.48, and the Nasdaq composite slid 511.51 points, or 1.9%, to 26,692.87.

The trigger was a consumer inflation report showing prices for fuel, food and other living costs 3.7% higher overall than a year earlier. That is an acceleration from the 3.4% rate in August and worse than the 3.6% economists expected.

Inflation has stayed stubbornly painful since the economy emerged from the COVID-19 crevasse, and the recent acceleration has been driven in part by fuel-price jumps tied to the war with Iran — Brent crude added 0.4% Wednesday to $106.06. Continued American spending is also keeping prices climbing.

The proof of the shock showed up in the bond market. The 10-year Treasury yield briefly jumped above 5.32% from less than 5.17% just before the inflation report's release, before giving back much of the gain.

Yields on shorter-term Treasurys leaped even more as traders raised their expectations for coming Fed rate hikes, according to CME Group data — markets moved to a nearly 35% chance of a federal funds rate increase at the next meeting in two weeks, up from 22% a day earlier, though those odds moderated as the day progressed.

Much of Wall Street's pain came from companies riding the AI frenzy, which had powered huge profit growth and stellar stock gains. Higher yields make borrowing more expensive, and that could make it harder for companies to raise cash to build data centers and fill them with AI chips.

Nvidia dropped 3.2%, Broadcom 3.1% and Advanced Micro Devices 5.7% among the heaviest weights on the S&P 500. CoreWeave tumbled 15.5% for its worst day since February, GE Vernova fell 6.2% and Oracle sank 8.8%.

High yield levels push down prices for all kinds of stocks, and the main offset is delivering bigger profits — which means companies get punished for falling short.

Bank of America dropped 4.8% after reporting weaker summer profit and revenue than analysts expected; per the AP, its profit would have missed even without the $1.2 billion in Treasury Department fines announced late Tuesday for alleged anti-money laundering and sanctions violations.

State Street sank 4.1% after weaker-than-expected quarterly revenue.

The Fed recently raised the interest rate it controls for the first time in three years in hopes of reining in inflation, and Wednesday's report raised the stakes for its next meeting.

Vanguard Senior Economist Adam Schickling said inflation should slow as Americans become more price-sensitive and productivity improves, but 'patience will be required.'