The U.S. stock market drifted lower on Tuesday as hotter-than-expected inflation data for October rattled investors and drove bond yields higher.
The consumer price index rose 0.4% in October, exceeding the 0.3% advance projected by economists polled by Dow Jones. Core CPI, which excludes volatile food and energy costs, also increased 0.3% for the month.
The S&P 500 fell 0.6%, giving back a portion of its gains from the previous session. The Dow Jones Industrial Average dropped 154 points, or 0.3%, while the Nasdaq composite slid 0.8%.
The inflation readings aligned with thresholds mentioned earlier by Federal Reserve officials. Speaking in London prior to the report, Fed Gov. Christopher Waller warned that a larger policy shift might be necessary if the core measure hit 0.3%. In that situation, he suggested the central bank should weigh lifting the federal funds rate by half a percentage point instead of the usual quarter-point increment.
Following the data release, traders increased their bets on upcoming rate hikes. The yield on the 10-year Treasury jumped to 4.97% from 4.88% late Monday. This notable movement in the bond market helps set borrowing costs for mortgages and other loans extended to households and businesses throughout the United States.
Prior to this jump, the 10-year Treasury yield had been decreasing since early October, when it topped 5.30% amid heightened worries over elevated inflation, high interest rates, and the government’s substantial debt.
Technology shares faced downward pressure alongside the broader market slide. Micron Technology sank 3.2% and GE Vernova dropped 5.9%.
Earlier coverage: US Stock Futures Rise as Investors Await Inflation Data and AI Earnings
