Inflation Surprise Sends U.S. Stocks Lower as Treasury Yields Rise

Major U.S. indexes declined after October’s inflation report showed prices rising more than economists had anticipated. The S&P 500 fell 0.6%, the Dow Jones Industrial Average lost 154 points, or 0.3%, and the Nasdaq composite dropped 0.8% in early trading. A separate update put the declines at 0.7%, 172 points and 1%, respectively.

The report showed an underlying inflation measure rose 0.3% from September, matching the level Fed Governor Christopher Waller had identified as a reason to consider a larger-than-usual rate increase. Speaking before the figures were released, Waller said a half-percentage-point move might be warranted rather than the typical quarter-point increase.

Bond yields climbed as traders raised their expectations for further rate hikes. The 10-year Treasury yield rose to 4.97% from 4.88% late Monday. Higher yields can push up borrowing costs for households and businesses and weigh on stock prices.

Technology shares tied to artificial intelligence were among those under pressure. Nvidia fell 3.8%, while Micron Technology lost 3.2% and GE Vernova dropped 5.9%. Nvidia has also been investigating allegations involving its chief executive and a business executive; the company’s board has said it sees no reason to believe national security or company secrets were compromised.

Oil prices fell despite the jump in yields. Brent crude dropped 3.1% to $89.67 a barrel after President Donald Trump said the war in Iran was “militarily is effectively over.” The inflation figures strengthened expectations that the Federal Reserve could raise rates at its December meeting and later.