US rate outlook trumps everything
SPY•US stocks fell on Tuesday after hotter-than-expected inflation pushed bond yields higher and raised expectations of faster interest-rate increases. The Nasdaq fell 0.7%, the S&P 500 0.4% and the Dow 0.3%, while the two-year Treasury yield rose 20 basis points.
1. Stocks fall on rate worries
US stocks fell on Tuesday, bucking gains in other markets, as another hotter-than-expected inflation reading sent bond yields higher and stoked expectations that interest rates might rise faster than anticipated. The Nasdaq fell 0.7%, the S&P 500 lost 0.4% and the Dow declined 0.3%; the two-year Treasury yield rose 20 basis points, and the yield curve flattened.
2. Waller raises hike prospect
Federal Reserve Governor Christopher Waller said he could favor a 50-basis-point rate hike next month if October consumer-price data came in hot. The data later showed brisk inflation, and Waller’s comments added to market focus on the rate outlook.
3. AI news in focus
The rate moves overshadowed AI-related developments, including Anthropic’s proposed IPO valuation of $1.4 trillion on a fully diluted basis and about $1 trillion on a non-diluted basis. Nvidia fell 5.5% on Tuesday, leaving shares 31% below their October 6 record high.
