Wall St falls as hot inflation data fuels rate-hike jitters

Wall Street's major indices experienced a decline on Tuesday, following a two-day rebound in tech shares. This downturn occurred after the release of a hotter-than-anticipated October inflation data, which intensified concerns over the Federal Reserve potentially raising interest rates for an extended period. Consumer prices in the United States increased by more than anticipated, with October's inflation rate rising by 0.4 percent from the previous month.

Consequently, the U.S. 2-year yield surged by 21.4 basis points, marking its largest one-day increase since April of the prior year.

The market had previously discounted some of the anticipated Federal Reserve tightening measures over recent weeks. However, with the latest inflation figures, it now appears the Fed may be compelled to consider additional rate hikes. James McCann, a senior economist at Edward Jones, commented on this development, stating that traders are now contemplating a higher likelihood of rate increases.

The uncertainty surrounding potential further interest rate hikes has led to a shift in market sentiment, particularly affecting rate-sensitive sectors. Real estate and utilities witnessed declines of more than 0.5 percent each, while the technology sector led the market losses, plummeting by 1.8 percent. Nvidia, a prominent chip manufacturing company led by CEO Jensen Huang, experienced a 6.3 percent drop.

This decline follows a second consecutive day of losses, as investors expressed growing apprehension about Huang's future at the company following an internal investigation into allegations of espionage involving a Chinese businesswoman.