Wall St retreats as hot inflation data, Fed comments fuel rate worries

On November 10, US stocks experienced a decline as hot inflation data and comments from the Federal Reserve raised concerns about potential rate hikes. The Consumer Price Index (CPI) rose 0.4% in October, marking the third consecutive 0.4% or greater increase and surpassing the 0.3% estimate of economists. Fed Governor Christopher Waller suggested that the central bank should raise short-term borrowing costs in December, even if inflation cools, and may consider a larger half-point rate hike if the inflation situation worsens.

The market now expects a rate hike of at least 25 basis points during the December meeting, up from 84% a day earlier. The two-year US Treasury yield surged 19.1 basis points to 4.738%, nearing its largest daily gain since April 2025. Oil prices dropped to two-month lows despite US officials downplaying any imminent military actions against Iran.

Analysts attributed the market's spookiness to concerns that the Fed might raise rates more aggressively than previously anticipated, fearing the impact of recent oil price fluctuations on inflation. The Dow Jones Industrial Average fell 223.12 points (0.43%) to 52,166.63, while the S&P 500 lost 48.06 points (0.64%) to 7,501.88, and the Nasdaq Composite declined 290.69 points (1.15%) to 24,962.44.

The S&P 500 and Nasdaq had risen for two consecutive days following a sharp market downturn the previous week, which was triggered by concerns about government regulations potentially slowing the AI sector's growth. The technology sector of the S&P 500 dropped more than 1%, led by Nvidia's more than 5% decline and a 10% loss over two sessions.

The AI-focused ETF, Anthropic, is set to go public later this month, raising up to $64.4 billion and potentially intensifying competition among major AI companies for investor funds.