US stocks: Wall Street ends lower as hot inflation data, Fed comments heighten rate worries

The three major US stock indices closed lower on Tuesday, November 10, as a hotter-than-expected inflation reading raised concerns about the Federal Reserve potentially raising interest rates more aggressively next month. The Labor Department reported that the Consumer Price Index rose 0.4 percent last month, its third consecutive gain of 0.4 percent or more, surpassing economists' estimate of 0.3 percent.

Fed Governor Christopher Waller suggested the central bank should hike short-term borrowing costs in December even if inflation cooled, and consider a larger half-point rate increase if inflation worsens. Markets now expect at least a 25 basis point rate hike at the Fed's December meeting, up from 84 percent on Monday, and expectations for a 50 basis point increase rose to 11.8 percent after zero consideration the previous day.

The 2-year US Treasury yield surged nearly 18.9 basis points to 4.736 percent, its biggest daily gain since April 9, 2025, amid speculation of a more aggressive Fed response to inflation. Oil prices eased to two-month lows as officials downplayed any imminent military actions against Iran. Analyst Jason Ware from Albion Financial Group suggested the market's reaction was irrational, attributing the inflation surge to oil, energy, and diesel prices.

The Dow Jones Industrial Average fell 157.86 points, or 0.3 percent, to 52,231.89, while the S&P 500 lost 29.01 points, or 0.38 percent, to 7,520.93, and the Nasdaq Composite dropped 187.26 points, or 0.74 percent, to 25,065.87. The S&P 500 and Nasdaq had risen for two straight days following sharp losses the previous week due to concerns over potential government regulations slowing AI development.

However, the S&P 500 technology sector dropped 1.4 percent, the worst-performing among the 11 major sectors, driven by Nvidia's decline of 5.4 percent, which has dropped 9.6 percent over two sessions. This decline stems from concerns over CEO Jensen Huang's future at the chip company after an internal probe into spy allegations involving Chinese businesswoman Alice Huang.

Although semiconductor index declines were muted, the broader Philadelphia semiconductor index fell 0.4 percent after two consecutive days of gains. Fed officials, including Dallas Fed President Lorie Logan, Kansas City Fed President Jeff Schmid, and Vice-Chair Michelle Bowman, took a hawkish stance, emphasizing the central bank's need to focus on inflation.

Investors also braced for Anthropic's anticipated public listing, which could reshape competition for investor dollars and prompt portfolio repositioning.