NEW YORK, New York - U.S. stocks tumbled on Wednesday as the latest CPI reading showed inflation in the United States has surged to 4.2 percent, its highest level in 3 years.

"The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent on a seasonally adjusted basis in May, after rising 0.6 percent in April," the U.S. Bureau of Labor Statistics said in a statement Wednesday. "Over the last 12 months, the all items index increased 4.2 percent before seasonal adjustment," the statement said.

The data came as a widespread risk-off mood gripped global equity markets on Wednesday, with major indices on both sides of the Atlantic closing sharply lower. U.S. benchmarks suffered their worst session in weeks, while Asian markets saw even steeper declines, led by a brutal sell-off in South Korea.

Adding to market woes, hostilities between Iran and the United States have broken out again, and President Donald Trump is talking of hitting Iran hard again.

"The Iran war story is really consequential," Jed Ellerbroek, portfolio manager at Argent Capital Management told CNBC Wednesday. "Either investors are going to be proven right, that [there's] nothing to worry about, Trump will take care of it, we'll get a deal with Iran and the strait will open up, but if not, it feels like oil prices are going to have to go up a lot."

[In this investing environment, it's impossible to be comfortable," he said.

On Wall Street, the Dow Jones Industrial Average plunged 953.21 points, or 1.87 percent, to end at 49,918.90.

The broader Standard and Poor's 500 fell 119.57 points to 7,267.08, a loss of 1.62 percent, on volume of 3.162 billion shares.

The tech-heavy NASDAQ Composite dropped 509.32 points, or 1.98 percent, closing at 25,169.50 with turnover of 7.43 billion.

In Canada, the S&P/TSX Composite index slid 260.37 points to 34,151.32, down 0.76 percent on volume of 273.485 million.

EUROPE

European markets also finished mostly in the red. Germany's DAX P fell 237.75 points, or 0.97 percent, to 24,195.31.

France's CAC 40 gave up 41.60 points to end at 8,161.83, a decline of 0.51 percent.

The EURO STOXX 50 I dropped 39.79 points to 6,009.95, down 0.66 percent, while the Euronext 100 Index edged lower by 2.95 points, or 0.16 percent, finishing at 1,862.64.

In London, the FTSE 100 bucked the regional trend, adding 27.48 points to close at 10,254.81, a gain of 0.27 percent. Belgium's BEL 20 also rose, climbing 33.47 points, or 0.60 percent, to 5,598.59.

ASIA

Losses were most severe in Asia. South Korea's KOSPI Composite Index cratered 366.11 points, or 4.52 percent, to end at 7,730.82.

Taiwan's TWSE Capitalization Weighted Stock Index tumbled 1,478.90 points, closing at 43,225.54 for a loss of 3.31 percent. 

Japan's Nikkei 225 dropped 1,237.36 points to 64,179.27, down 1.89 percent.

Hong Kong's HANG SENG INDEX fell 157.94 points to 24,407.96, a decline of 0.64 percent. Singapore's STI Index lost 64.40 points, or 1.28 percent, finishing at 4,958.85.

China's SSE Composite Index eased 16.80 points to 3,993.23, down 0.42 percent on volume of 4.035 billion.

Elsewhere in the region, Australia's S&P/ASX 200 rose 49.10 points, or 0.57 percent, to 8,653.30, while the broader ALL ORDINARIES added 32.20 points to 8,857.00, up 0.36 percent.

New Zealand's S&P/NZX 50 INDEX GROSS advanced 49.57 points to 13,253.65, a rise of 0.38 percent. Indonesia's IDX COMPOSITE outperformed, soaring 155.73 points, or 2.71 percent, to 5,902.38.

India's S&P BSE SENSEX edged up 64.42 points, or 0.09 percent, to 73,983.18. Malaysia's FTSE Bursa Malaysia KLCI gained 3.46 points, or 0.21 percent, to 1,678.96.

MIDDLE EAST & AFRICA

In the Middle East, Israel's TA-125 fell 51.73 points to 4,139.40, down 1.23 percent.

Egypt's EGX 30 Price Return Index dropped 1,118.10 points, or 2.13 percent, to 51,256.70 on volume of 452.595 million.

South Africa's Top 40 USD Net TRI Index declined 133.18 points, or 1.97 percent, to 6,610.69.

FOREX UPDATE: U.S. Dollar Edges Lower as Euro Holds Firm; Yen Weakens Past 160

The world's foreign exchange markets saw modest but notable moves on Wednesday, with the U.S. dollar trading mixed against major counterparts as investors weighed interest rate expectations and risk sentiment.

The euro edged higher against the greenback, with EUR-USD trading at 1.1542, a gain of 0.01 percent. The move, though slight, signaled renewed buying interest for the common currency after a period of consolidation.

Meanwhile, the U.S. dollar strengthened sharply against the Japanese yen, as USD-JPY jumped to 160.53, rising 0.11 percent. The yen's decline pushed the pair deeper into multi-decade high territory, keeping traders on alert for possible verbal intervention from Tokyo.

Sterling remained resilient, with GBP-USD quoted at 1.3374, up 0.04 percent, while the Australian dollar negatively outperformed its peers. AUD-USD sinking 0.43 percent to reach 0.7000 — a psychologically significant level that last attracted strong options interest.

In North American trading, the U.S. dollar slipped marginally against the Canadian dollar. USD-CAD fell 0.04 percent to 1.3944, as oil prices provided some support to the loonie.

The Swiss franc continued to firm against the dollar, with USD-CHF dropping 0.21 percent to 0.7999 — marking another session below the 0.8000 figure

(This report incorporates quotes retrieved with the assistance of artificial intelligence).

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