US stocks declined on Tuesday as stronger-than-expected inflation data raised expectations of further Federal Reserve interest rate increases, reversing some of Monday’s sharp market rally.
The S&P 500 fell 0.38% to 7,520.93, while the Nasdaq Composite declined 0.74% to 25,065.87. The Dow Jones Industrial Average lost 157.86 points, or 0.30%, to close at 52,231.89.
The US consumer price index rose 0.4% in October, exceeding economists’ expectations of a 0.3% increase. Core inflation, which excludes food and energy prices, advanced 0.3%, also above forecasts of 0.2%. Annual inflation figures were not provided due to the 2025 government shutdown.
The figures reinforced concerns that inflation remains persistent, increasing the likelihood of further monetary tightening. Federal Reserve Governor Christopher Waller indicated that a December rate increase was likely and raised the possibility of a larger 50-basis-point move.
US Treasury yields climbed following the inflation report, with the benchmark 10-year yield rising above 5% as investors reassessed the outlook for interest rates.
Technology stocks came under renewed pressure, with Nvidia falling more than 5% amid ongoing scrutiny of chief executive Jensen Huang’s reported relationship with a woman alleged to have links to Chinese intelligence. The decline followed the chipmaker’s absence from Monday’s broader technology rally.
The weakness also reflected continuing concerns about the outlook for artificial intelligence infrastructure investment following the US midterm elections.
Oil prices extended their recent decline amid hopes of de-escalation in the Iran war. Brent crude settled below US$92 a barrel, its lowest level since August, while US crude traded around US$86.39.
Australian Market Outlook
Australian shares are set to open lower on Wednesday, with S&P/ASX 200 futures down 34 points, or 0.37%, to 9,127.
The negative lead follows Wall Street’s retreat as stronger US inflation figures and expectations of further Federal Reserve tightening weighed on investor sentiment.
Higher US Treasury yields could also influence global equity valuations, particularly in interest rate-sensitive sectors, as investors reassess the outlook for borrowing costs.
Locally, Aristocrat Leisure will release its full-year financial results, while DigiCo Infrastructure and Flight Centre will hold annual general meetings.
