The Dow Jones industrial average shed 700 points, or around 2%, during morning trade, while the Nasdaq composite and the S&P 500 were down by around 3.4% and 2.7% respectively.

May’s CPI reading, released by the Labor Department on Friday morning, smashed estimates to rise 1% from a month earlier.

The hotly anticipated data puts further pressure on the Federal Reserve to take a continued hawkish approach to monetary policy.

Central bankers are finding it increasingly difficult to resist tightening monetary policy.

Thursday saw the European Central Bank promise to raise interest rates by 25 basis points in July, with ECB President Christine Lagarde signaling another hike would be likely in September.

Back in the U.S., Friday’s downward turn in markets saw a barrage of stocks and sectors suffer selloffs as investors priced in an increased likelihood of more rate hikes from the Fed.

Tech stocks were hit hard, with Apple losing more than 3%, and Amazon shares dropping around 5%.

The selloff followed a tumultuous session on Wall Street on Thursday, which saw major indexes in negative territory at the closing bell.

Across the Atlantic, European stocks also slumped following the ECB’s rate hike signals a day earlier.

Stocks have been on a roller coaster this year as market participants have faced pressure from spiraling inflation levels, Russia’s invasion of Ukraine, and the ongoing fallout from the COVID-19 pandemic.

The year-to-date return on the Dow is around -13%, according to data from Bloomberg.

Edward Moya, a senior market analyst at Oanda, said in a note to investors on Friday that although the May CPI reading was much hotter than estimates, inflation had likely not yet peaked.

“CPI readings are skyrocketing, and unfortunately that may continue for another report or two as shelter, gasoline, and food prices are the biggest drivers,” he said.

“This was a very bad inflation report for both the White House and Fed. The Fed’s latest mistake is that they did not act strongly to cool inflation, and they will now be forced to deliver more rate hikes as inflation is clearly not transitory and not ready to peak.”

Moya noted that stagflation—a phenomenon in which prices soar while economic growth plummets—was becoming the base case for many investors.