US equities close lower with inflation boosting bets on rate hikes
SPY•All three major US indexes closed lower after October inflation data boosted expectations for Federal Reserve rate hikes; the Nasdaq fell 0.7%. The 10-year Treasury yield rose to about 4.99%.
1. Indexes end lower
Wall Street’s three major indexes finished lower, with the Nasdaq Composite down 0.7% and leading declines. Investors weighed elevated inflation and the prospect of more aggressive Federal Reserve tightening; falling oil prices offered some support.
2. Rate hike bets rise
Traders priced in a 9.5% probability of a half-percentage-point rate increase in December, up from zero before the inflation data. The probability of a quarter-point increase rose to 90.5% from 84% on Monday, while bets that rates would remain unchanged fell to zero from 16%.
3. Tech leads sector losses
Technology fell 1.4% and was the biggest drag on the S&P 500, while financials gained 0.5%, leading five sectors that closed higher. The 10-year Treasury yield rose to about 4.99%; the dollar gained about 0.6%, while crude oil, bitcoin and gold fell.
