US stocks retreated on Tuesday, with the Dow Jones Industrial Average falling 122 points, as a hotter-than-expected October inflation report and hawkish remarks from Federal Reserve Governor Christopher Waller dampened investor sentiment. The S&P 500 slipped about 0.52%, while the Nasdaq Composite dropped more than 0.79%, interrupting a two-day rebound in technology shares following a turbulent week.
Inflation Data and Fed Rate Expectations
The Labor Department reported that the consumer price index (CPI) rose 0.4% in October, exceeding economists' forecasts of a 0.3% increase. Core CPI, which strips out volatile food and energy prices, climbed 0.3% versus the anticipated 0.2%. The report omitted annual figures due to the 2025 government shutdown, but the stronger-than-expected monthly readings fueled concerns that inflationary pressures remain persistent.
Adding to the pressure, Governor Waller stated earlier in the day that the central bank should raise interest rates by at least 25 basis points in December, even if inflation had cooled. He also suggested that a 50-basis-point hike could be warranted if price pressures accelerate. According to the CME FedWatch tool, traders priced in nearly a 99% probability of a December rate increase, intensifying the sell-off in rate-sensitive technology stocks.
AI Sector in Focus: Nvidia and Anthropic
Technology shares led the decline, with Nvidia falling approximately 3.51%. A report from The Information alleged that CEO Jensen Huang's relationship with a Chinese businesswoman accused of being a Beijing spy facilitated the shipment of at least $7.5 billion worth of Nvidia chips through Chinese firms. The development cast a spotlight on Huang's leadership at a company central to the global AI investment boom.
Meanwhile, Anthropic's IPO plans added another layer of uncertainty. The Claude developer's latest prospectus indicated that its offering could raise as much as $64.4 billion, giving the company a fully diluted valuation of up to $1.4 trillion. If realized, it would be one of the largest IPOs on record, potentially intensifying competition for investor capital among major AI players.
Chipmakers also traded lower, with Marvell Technology down 2.15%, while Intel and Micron Technology lost between 1% and 2%. Advanced Micro Devices bucked the trend, while Qualcomm slipped 1%.
CoreWeave Earnings and Oil Prices
Investors also looked ahead to CoreWeave's quarterly results, due after the market close. The neocloud company's shares have been under pressure amid concerns about the sustainability of AI-related spending and its debt burden. A strong performance could reassure investors about demand for AI infrastructure, while weaker results might reinforce worries about the industry's growth prospects. CoreWeave and peer Nebius both fell in early trading.
Elsewhere, Skydance shares plunged 9.9% after the media company announced cost-cutting measures and warned that Warner Bros.' film slate underperformance could reduce fourth-quarter profit by as much as $200 million.
Falling oil prices provided some relief, with Brent crude slipping below $90 a barrel for the first time since August, potentially easing energy-related inflation concerns.
This article is for informational purposes only and does not constitute financial advice.
