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US stocks weakened on Tuesday due to higher than expected CPI and dovish comments from Federal Reserve officials. The market once again raised concerns about the possibility of raising interest rates in December, while heavy losses from HUDA dragged down technology stocks.
US stocks The four major indexes closed slightly lower on Tuesday (10th) as higher-than-expected inflation data boosted market expectations.federal Reserve Expectations of an interest rate hike next month, and a key Federal Reserve official suggesting he would not rule out a 2-point rate hike next month, also have investors worried that the central bank may take more aggressive steps to raise interest rates.
On the 10th, the Dow Jones Industrial Average fell 157.86 points, or 0.30%, to close at 52,231.89 points; The S&P 500 index fell 29.01 points, or 0.38%, to 7,520.93; The Nasdaq index fell 187.26 points, or 0.74%, to close at 25,065.87.
The Philadelphia Semiconductor Index fell 35.60 points, or 0.35%, to 9,998.33.
Nvidia’s share price fell more than 5%, underperforming the three major US stock indexes. Stocks failed to keep pace with Monday’s surge led by technology stocks. It comes after CEO Jen-Hsun Huang admitted over the weekend that she had an extramarital affair with a man suspected of being a Chinese spy.
The US Labor Department said the consumer price index (CPI) rose 0.4% month-on-month last month. It was the third consecutive month the index rose 0.4% or more and was more than the 0.3% expected by economists polled by Reuters. The index had earlier risen 0.6% in September.
Fed Governor Waller said that even though data shows that inflation declined last month, the Fed should raise short-term borrowing costs in December; If the inflation situation worsens, it should consider increasing the interest rate increase to half a percentage point.
The market has now fully priced in expectations of at least a 1 percent hike at the Federal Reserve’s December meeting, according to Chicago Mercantile Exchange (CME) FedWatch data. This probability has increased from 84% on Monday; While the expectation of a 2-point rate hike, which was not considered at all on the previous trading day, has now increased to 11.8%.
In addition to Waller, several other Fed officials who spoke on Tuesday also took a hawkish stance.
Dallas Fed President Logan said the Fed may need to raise interest rates at least twice by 25 basis points each time to curb inflation and may need to act quickly; While Kansas City Fed President Schmidt said he believes the current policy interest rate is “pretty loose.”
Bowman, the Fed’s vice chairman of regulatory affairs, did not explicitly call for interest rate hikes, but acknowledged that inflation is the Fed’s top priority.
U.S. 2-year Treasury yields, which typically move in line with the Federal Reserve’s interest rate expectations, rose about 18.9 basis points to 4.736%. The yield is on track to post its biggest one-day rise since April 9, 2025, when Trump announced the implementation of sweeping global tariffs.
The surge in yields comes even as oil prices have fallen to a two-month low.
Tom Hanlin, national investment strategist at US Bank Asset Management, said: “The market is estimating that the Fed may have to take more aggressive steps to raise interest rates next year.” He later added: “This time the CPI data suggests that inflation may be more stable than expected and last longer.”
The S&P 500 and Nasdaq had risen for two consecutive sessions, recovering from last week’s declines due to concerns about government regulation of potential AI manufacturing.
But on Tuesday, S&P 500 technology stocks fell 1.4%, becoming the worst-performing stock among the 11 major stocks. This came down mainly due to another decline in Huida’s share price. HUIDA has declined by 9.6% in the last two trading days.
