Stocks plummeted on Friday as data showing inflation accelerated to a fresh four-decade high in May rattled Wall Street and sent indexes to another week of losses.

The Dow Jones Industrial Average tumbled  880 points or 2.7%. The tech-heavy Nasdaq index slid 414.21 points, or 3.5%, while the broad-based S&P 500 sank 116.96 points, or 2.9%.

All three indexes posted their biggest weekly percentage declines since January.

The CBOE Volatility Index, known as Wall Street’s “fear gauge,” jumped nearly 5% to 27.91 points.

Both major oil price benchmarks, the West Texas Intermediate and the Brent crude, were hovering above $120 per barrel as the Russia-Ukraine war and surging demand upend global energy markets.

The volatility also impacted cryptocurrencies, which have moved in tandem with the stock market in recent months. Bitcoin sank more than 2% to $29,077.

The latest Consumer Price Index data added to the fears regarding the Federal Reserve’s ability to engineer a “soft landing” for the economy while hiking rates. Prices surged by a higher-than-expected 8.6% in May, reaching their fastest rate of increase since 1981.
The inflation numbers also added to volatility that has weighed on stocks for the last several months.

Investors are concerned that the Fed won’t be able to combat red-hot inflation without triggering an economic recession.

May’s steep inflation figure was driven largely by the higher cost of gas, which has hit record highs in recent days. Overall consumer prices jumped 1% in May compared to the previous month.

“Friday’s inflation data suggests the ‘peak inflation’ debate may be premature,” said Nancy Davis, founder of Quadratic Capital Management. “The idea of peak inflation assumes that our supply chain disruptions are over and won’t recur anytime soon and I’m not so sure we can be confident of that.”

Fed Chair Jerome Powell has already indicated that the central bank is likely to enact larger-than-normal half-percentage point rate hikes at meetings later this month, with another expected in July. In May, the Fed hiked rates by a half-percentage point for the first time since 2000.

While some analysts have suggested the Fed could pause its hikes in September to assess economic conditions, the steep inflation number in May could add to the bank’s urgency.

Fed Vice Chair Lael Brainard said earlier this month that she felt it was “very hard to see the case for a pause.”

“We’ve still got a lot of work to do to get inflation down to our 2% target,” Brainard told CNBC.