august pce inflation came in hotter than wall street expected us stocks dropped sharply friday with major indexes posting their lowest finishes since 2020 and logging a third straight quarterly decline as investors grew more fearful that aggressive interest rate hikes by the federal reserve will drive the economy into a downturn in an attempt to quell inflation the drop left the dow and sp 500 at their lowest since november 2020 while the nasdaq posted its lowest close since july 29 2020 the dow dropped 88 in september while the sp 500 tumbled 93 and the nasdaq lost 105 for the quarter the dow dropped 67 the sp 500 declined 53 and the nasdaq gave up 41 in keeping with the historical pattern us stocks suffered during the month of september as an assertive federal reserve helped push treasury yields and the dollar higher which in turn undermined equity valuations seeits the worst september for stocks since 2008 what that means for october investors on friday digested a reading from the personal consumption expenditure inflation index for august which showed that core consumer prices climbed by 06 last month more than wall streets forecast of 05 the core inflation measure excludes volatile food and energy prices see cheaper gas holds down inflation pce shows but the cost of everything else is still going up fast that means the fed will remain hellbent on killing inflation and the best way to do that is to increase rates kill the housing market and get rental costs down the pce doesnt have housing and rents as a big component as the cpi does so the fact that it is rising is a warning sign said louis navellier founder of navellier  associates in emailed comments read will october be another stockmarket bear killer why investors need to tread carefully around seasonal trends the reading largely confirmed similar data from the consumerprice index another closely watched inflation barometer which sent stocks lower earlier this month since that report was released just over two weeks ago the sp 500 has fallen more than 10 helping to underscore this point data out of the eurozone showed inflation accelerated at a record pace last month see eurozone inflation posts new record high of 10 in september in other news investors also heard from fed vice chair lael brainard who reiterated that the central bank would keep interest rates elevated to combat inflation even if it harms the economy see fed wont pull back from rate hikes prematurely brainard says since it will take time for high interest rates to bring inflation down brainard said the fed is committed to avoiding pulling back prematurely investors were also keeping an eye on megacap tech stocks apple inc aapl fell 3 on friday after leading markets lower a day earlier following a downgrade by bank of america need to knowheres why investors should start betting on apple and the stock market now a final reading on the university of michigan consumersentiment index for september showed consumers view of the economy improved somewhat during the month due to falling gas prices even as their outlook remained broadly pessimistic investors are now facing what may be one of the most important earning seasons in a very long time with a major rally in the cards if earnings dont disappoint and if the bears are right lead to a further leg down if earnings disappoint and 4th quarter estimates are cut navellier said seeus consumers remain pessimistic about economy even as inflation fears wane  steve goldstein and barbara kollmeyer contributed to this article