Stocks are plummeting today after the Bureau of Labor Statistics published its monthly Consumer Price Index (CPI) report. The S&P 500 is down 2.6% at the time of writing while the Nasdaq Composite eyes a nearly 3.5% drop. Why are stocks down today?

The stock market is reeling from today’s CPI report, which painted a bleak picture for price levels across the country. The Labor Department announced the CPI jumped 8.6% in May compared to the same month last year. This represents the highest reading since 1981, even managing to beat liberal preliminary estimates of an 8.3% annual jump. Over the past month, the CPI for All Urban Consumers rose 1%.

Among the top categories, Energy logged by far the greatest year-over-year price jump, increasing 34.6% from May 2021. This was reasonable, as Russia’s invasion of Ukraine and the subsequent sanctions placed against the former have resulted in decade-high fuel costs. This has put upward pressure on energy prices across the board and also contributed to general inflation.

May’s accelerated price level rise comes as something of a surprise after prices eased mildly in April. The CPI report has jump-started stagflation fears, as rising interest rates and slowed economic growth have resulted in recession whispers.

The entire week has been shaky for the stock market in anticipation of today’s inflation report. It seems the uncertainty wasn’t unfounded, however, as rising costs continue to eat away at investor sentiment.

Why Are Stocks Down Today?

In a particularly brutal double whammy, this morning the University of Michigan also released preliminary results for its consumer sentiment index for its June survey.

So far, the Index of Consumer Sentiment in June dropped to 50.2. This reflects a 14% month-on-month drop and a 41% decline from the same time last year. Meanwhile, the survey of Current Economic Conditions dropped 12.5% from last month, and the Index of Consumer Expectations fell 15.2%.

These figures reflect worsening perceptions of both current and future economic conditions. Survey of Consumers Director Joanne Hsu commented on this month’s preliminary results:

“Consumer sentiment declined by 14% from May, continuing a downward trend over the last year and reaching its lowest recorded value, comparable to the trough reached in the middle of the 1980 recession … Overall, gas prices weighed heavily on consumers, which was no surprise given the 65 cent increase in national gas prices from last month (AAA). Half of all consumers spontaneously mentioned gas during their interviews, compared with 30% in May and only 13% a year ago. Consumers expect gas prices to continue to rise a median of 25 cents over the next year, more than double the May reading and the second highest since 2015. In addition, a majority of consumers spontaneously mentioned supply shortages for the ninth consecutive month.”

Stocks were seemingly destined to fall today given the slew of bearish reports. Whether the rest of June will offer a change of pace for the downtrodden markets remains to be seen.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.