S&P 500 loses $650 billion on fears of inflation returning

The rise in the US purchasing managers index in December 2024 has revived fears about the possibility of rising inflation and disrupting the Federal Reserve’s plan to cut interest rates, causing the S&P 500 to lose about $650 billion.

The Institute for Supply Management data showed that the services purchasing managers index rose in December to 54.1 from 52.1 in November, exceeding market expectations of 53.3.

The data also showed that the prices paid index – a major component of inflation – rose to 64.4 from 58.2, while the employment index fell slightly to 51.4 from 51.5. According to CNN.

That put the prices paid by purchasing managers at a 22-month high, the last time PMI prices were this high, when U.S. inflation was around 6% in February 2023. Financial markets reacted immediately, with the S&P 500 falling by around 100 points in just five hours after the data was released on Tuesday, wiping out around $650 billion from the market value of companies in the index.