U.S. stocks slip as inflation data exceeds expectations, Treasury yields rise

U.S. equity markets retreated on Tuesday following the release of inflation data that showed price pressures were stronger than economists had anticipated. The S&P 500 dropped 0.6%, the Dow Jones Industrial Average fell 0.3% (down 154 points), and the Nasdaq Composite slipped 0.8% as of 9:35 a.m. Eastern time.

The bond market pressured stocks after the report revealed higher-than-expected costs for groceries, electricity and other essentials, raising the likelihood that the Federal Reserve could raise its benchmark rate at the December meeting and possibly beyond. Higher rates are intended to curb inflation but also increase borrowing costs and can dampen equity valuations.

Fed Governor Christopher Waller, speaking in London before the data were released, warned that a “stronger policy move may be needed” if a core inflation measure rose by 0.3% from September, suggesting a half-point hike rather than the usual quarter-point. The inflation report later confirmed the core measure increased exactly 0.3%, matching Waller’s threshold.

Treasury yields responded, with the 10-year Treasury yield climbing to 4.97% from 4.88% on Monday, a move that influences mortgage and loan rates for households and businesses. The yield had been falling since early October after peaking above 5.30% amid inflation and debt concerns.

Oil prices fell on the same day, with Brent crude dropping 3.1% to $89.67 per barrel. President Donald Trump said the war in Iran, which had previously pushed oil higher, “militarily is effectively over.”

Technology stocks tied to the artificial-intelligence sector led the declines. Nvidia, the largest component of the S&P 500, slid 3.8% after its CEO disclosed a personal relationship that raised national-security concerns. Micron Technology fell 3.2% and GE Vernova dropped 5.9%, extending the sell-off in AI-related shares.