Key takeaways
- S&P 500, Dow and Nasdaq open lower after inflation
- October core CPI exceeds expectations at 0.3%
- Fed official raises possibility of larger December hike
The US stock market opened lower on Tuesday, November 10, as hotter-than-expected inflation data revived concerns about another Federal Reserve interest rate increase, threatening to interrupt Wall Street's recovery from last week's technology selloff.
The S&P 500 fell 0.49% to 7,513.09 at the opening bell, while the Dow Jones Industrial Average declined 226 points, or 0.43%, to 52,163.21. The Nasdaq Composite dropped 0.81% to 25,047.45 as technology stocks faced renewed pressure.
The reversal follows Monday's broad market rally, when falling oil prices helped the S&P 500 gain 2.35% and the Dow surge more than 1,100 points.
S&P 500 Falls as October CPI Exceeds Expectations
According to the Bureau of Labor Statistics, US consumer prices increased 0.4% in October after rising 0.6% in September.
Core inflation, which excludes food and energy, rose 0.3%, exceeding expectations of approximately 0.2%.
Shelter costs increased 0.3% and accounted for more than 30% of the monthly headline increase. Food prices climbed 0.5%, while energy costs rose 0.7%.
The figures reinforce concerns that inflation remains persistent despite the recent decline in oil prices.
The report also arrives after the Nasdaq 100 entered correction territory, reflecting growing concerns about technology valuations and expensive artificial intelligence infrastructure.
Federal Reserve Warns of Possible 50-Basis-Point Rate Hike
Federal Reserve Governor Christopher Waller added to market uncertainty with remarks delivered in London before the inflation report.
In his November 10 speech, Waller said he favored a 25-basis-point increase in December but would consider a larger move if inflation remained elevated.
He specifically identified core CPI around 0.3% as a potential reason to consider a 50-basis-point hike.
That threshold was reached in Tuesday's report, although Waller's comments do not represent an official Federal Reserve decision.
Higher interest rates generally increase financing costs and can pressure equity valuations, particularly for technology companies whose expected profits extend far into the future.
The risk has become increasingly relevant as Treasury yields approach 5%.
Nvidia and AI Stocks Face Another Market Test
Technology shares remain particularly sensitive to rising borrowing costs following weeks of concerns about AI spending.
The recent AI stock valuation correction has increased scrutiny of companies financing massive data-center expansions through debt.
Nvidia is also facing company-specific uncertainty after Bank of America removed NVDA from its top-picks list, while Wells Fargo reduced its price target to $300.
Meanwhile, AMD recently benefited from Google's selection of EPYC processors, highlighting continued AI infrastructure demand despite broader market volatility.
