US stocks fell on Tuesday as hotter-than-expected October inflation data and hawkish comments from Federal Reserve Governor Christopher Waller weighed on investor sentiment.
The figures raised concerns that persistent price pressures could prompt the central bank to tighten monetary policy further, putting pressure on technology shares.
The S&P 500 declined around 0.52% while the Nasdaq Composite fell more than 0.79%. The Dow Jones Industrial Average declined 122 points.
The weakness threatened to interrupt a two-day rebound in technology stocks following a difficult week for financial markets.
Investors were also assessing developments involving Nvidia and Anthropic, as concerns about the sustainability of AI investment continued to influence sentiment.
Hotter inflation strengthens expectations of December rate hike
The US consumer price index rose 0.4% in October, exceeding economists’ expectations for a 0.3% increase, according to data released on Tuesday.
Core CPI, which excludes food and energy prices, increased 0.3%, compared with forecasts for a 0.2% rise.
The report did not include annual inflation figures because of the 2025 government shutdown.
The stronger-than-expected monthly readings added to concerns that inflationary pressures could remain persistent.
Federal Reserve Governor Christopher Waller said earlier on Tuesday that the central bank should raise interest rates by at least 25 basis points in December, even if inflation had cooled in October.
He also indicated that policymakers should consider a 50-basis-point increase if price pressures accelerated.
Traders were pricing in an almost 99% probability of a December rate hike, according to the CME FedWatch tool.
The prospect of further monetary tightening added pressure to equities, particularly technology stocks, which are sensitive to changes in interest rate expectations.
The latest inflation figures also raised the possibility that markets may need to reassess expectations for the Federal Reserve’s policy path after recently reducing bets on further tightening.
Nvidia and Anthropic put AI sentiment in focus
Technology stocks led the declines in trading, with investors assessing both company-specific developments and broader concerns about the AI industry.
Nvidia shares fell around 3.51%.
The Information reported that CEO Jensen Huang’s alleged 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 put additional attention on Huang’s leadership at a company central to the global AI investment boom.
Meanwhile, Anthropic’s IPO plans added another dimension to investor concerns about AI valuations and competition for capital.
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.
The proposed listing could become one of the largest IPOs on record and potentially intensify competition among major AI companies for investor funding.
Chipmakers also traded lower. Marvell Technology fell 2.15%, while Intel and Micron Technology lost between 1% and 2%.
Advanced Micro Devices was in the green while Qualcomm declined 1%.
CoreWeave earnings and oil prices remain in focus
Investors were also looking ahead to CoreWeave’s quarterly results, scheduled for release after the market close on Tuesday.
The neocloud company’s shares have faced pressure amid concerns about the sustainability of AI-related spending and its debt burden.
A strong performance could help reassure investors about demand for AI infrastructure, while weaker results could reinforce concerns about the industry’s growth prospects.
CoreWeave and peer Nebius both fell after the market opened.
Elsewhere, Skydance shares declined 9.9% after the media company announced cost-cutting measures and warned that the underperformance of Warner Bros. ‘ film slate could reduce fourth-quarter profit by as much as $200 million.
Falling oil prices provided some relief to markets.
Brent crude futures slipped below $90 a barrel for the first time since August, potentially easing some concerns about energy-related inflation.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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