Dow drops 457 points as US stocks slide after May inflation rises to fresh 4-decade high of 8.6%

• Stocks tumbled Friday after consumer price inflation in May rose to 8.6%, a new 41-year high.
• The Federal Reserve will meet next week and is likely to hike interest rates up by another 50 basis points.

US stocks fell Friday, on track to deepen weekly losses after headline consumer inflation rose by more than anticipated - data that should reinforce the Federal Reserve's will to raise interest rates to cool down the hottest inflationary environment since 1981.

Wall Street's big three equity indexes suffered after the Bureau of Labor Statistics said the Consumer Price Index rose 8.6% in the year through May. Economists surveyed by Bloomberg expected a reading of 8.3%.

Stocks were headed for declines for the week, with the Nasdaq Composite looking at a pullback of more than 4% to keep it firmly entrenched in a bear market.

May's inflation print was higher than April's result of 8.3%.. The BLS noted the energy index in May rose 3.9% over the month with the gasoline index rising 4.1%.

"How bad was the inflation report? Even used car prices, which had been the ray of hope for easing price pressures after three straight months of declines, jumped 1.8% for the month of May. April's decline in apparel prices was clearly an aberration, with an 0.7% increase in May largely reversing that," Greg McBride, chief financial analyst at Bankrate, said in a Friday note.

Here's where US indexes stood at 9:30 a.m. on Friday:

• S&P 500: 3,948.73, down 1.72%
• Dow Jones Industrial Average: 31,817.77, down 1.42 (457.15 points)
• Nasdaq Composite: 11,558.35, down 1.74%

"Any hopes that the Fed can ease up on the pace of rate hikes after the June and July meetings now seems to be a longshot. Inflation continues to rear its ugly head and hopes for improvement have been dashed again," said McBride.

The Federal Reserve will meet on June 14 and 15 and is expected to raise the fed funds rate by another 50 basis points to a range of 1.25%-1.50%.

Around the markets, mortgage applications are sliding and the US housing market is seeing its worst contraction since 2006, says Freddie Mac economist.

Billionaire investor Stanley Druckenmiller says we're six months into a bear market and a recession is coming.

Oil prices trimmed gains. West Texas Intermediate crude were up $0.03 cents at $121.54 per barrel. Brent crude, the international benchmark, picked up 1 cent at $123.08.

Gold fell 0.4% to $1,845.70 per ounce. The 10-year yield rose three basis points to 3.07%.

Bitcoin dropped 1.5% to $29,675.42.