U.S. stocks fell Tuesday after an inflation update showed an underlying measure rose by 0.3% from September, matching a threshold highlighted by a Federal Reserve governor.
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U.S. stocks fell Tuesday after a report showed inflation was worse across the country last month than economists expected.
The S&P 500 fell 0.4% as it gave back part of a rally from the previous day. The Dow Jones Industrial Average dropped 157 points, or 0.3%, while the Nasdaq composite sank 0.7%.
The decline followed Tuesday’s inflation data, which added pressure from the bond market. The yield on the 10-year U.S. Treasury jumped to 4.99% from 4.88% late Monday, with the move occurring even as Brent crude oil fell 1.2% to $91.49 per barrel.
The report came after Fed Governor Christopher Waller said in London that if an important underlying measure of inflation rose by 0.3% from September, “a stronger policy move may be needed,” including considering a half-percentage-point increase rather than the typical quarter point, adding that smaller moves could “put our credibility at risk.” Shortly afterward, the underlying measure in the report was exactly 0.3%.
Investors also pointed to the potential for higher borrowing costs, which can slow the broader economy and curb inflation by making it more expensive to borrow and invest. Higher Treasury yields tend to weigh on stock prices and can be especially difficult for real-estate companies, which rely on mortgage demand.
In the S&P 500, Lennar fell 5.4%. Rival homebuilders D.R. Horton dropped 3.8% and PulteGroup fell 3.9%, while Builders FirstSource declined 4.6%. Nvidia, the single heaviest weight in the index, dropped 5.5%.
Other AI- and tech-related stocks moved in both directions, including GE Vernova down 3.9%, Micron Technology down 1.1% and CoreWeave down 0.5%. Broadcom rose 3.9% and Advanced Micro Devices rose 1.3%.
Outside the U.S., indexes rose across much of Europe and Asia, including South Korea’s Kospi, which jumped 4.4%.
Overall, the S&P 500 fell 29.01 points to 7,520.93, the Dow fell 157.86 to 52,231.89, and the Nasdaq composite dropped 187.26 to 25,065.87.
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