The inflation rate has not reached its peak.

After easing off a bit in April, the Consumer Price Index hit a new 40-year high in May. Shares have fallen in response.

Dow Jones Industrial Average closed down 881 points, or 2.73%. Almost 117 points, or 2.91%, 

Were lost by the S&P 500. Nasdaq Composite ended down 414 points, or 3.52%.

At Friday's close, the S&P 500 is just 1.49 percentage points away from reaching the bear market threshold,

The equivalent of a 20% decline since its January record high. In January, it had declined 18.5%.

Investors overreacted to Friday's inflation report, or is there more trouble ahead for the stock market?

What is causing the stock market to fall?

An investor's willingness to pay for stock depends on two factors:

How much cash a company produces and how much cash it produces. This second factor is heavily influenced 

By interest rate moves. The Fed and other central banks engineered record-low interest rates early in the pandemic,

Helping to keep investment prices high. As a result, investors are being forced to leave the "easy mode".

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