Key Highlights

  • The S&P 500 fell 0.7%, the Dow lost 249 points, or 0.5%, and the Nasdaq Composite slipped 0.9%.
  • October CPI rose 0.4% against a 0.3% forecast, while core CPI rose 0.3% against a 0.2% forecast.
  • Micron and Marvell dropped 3%, Intel shed 2% and Nvidia fell more than 3% as investors moved away from tech.
  • Monday's rally was the S&P 500's best day since April, and Brent Crude fell below USD 90 on Tuesday.

US stocks fell on Tuesday, led by technology shares, as investors reacted to October Inflation above forecasts and a key Federal Reserve official's opening of the door to a half-point rate increase next month. The S&P 500 traded down 0.7%, the Dow Jones Industrial Average declined 249 points, or 0.5%, and the Nasdaq Composite slipped 0.9%.

The selling followed Monday's session, when the S&P 500 posted its best day since April as oil prices fell. That move came after a rocky week in which traders worried about a slowdown in Data Center buildouts after Democrats posted big victories in the midterm elections.

Technology Shares Lead the Decline

Investors moved away from tech. Micron Technology (NASDAQ:MU) and Marvell Technology (NASDAQ:MRVL) dropped 3% each, Intel (NASDAQ:INTC) shed 2% and Qualcomm (NASDAQ:QCOM) lost more than 1%. Nvidia (NASDAQ:NVDA), which did not take part in Monday's rally, fell more than 3%.

The declines extended a volatile stretch for AI-linked shares. Micron had fallen 17% in Thursday's sell-off, CoreWeave 10% and Nvidia 9%, leaving Nvidia down for the year. Tuesday's moves were smaller but ran in the same direction.

AI Trade Under Pressure After Thursday's Rout

Thursday's session delivered the worst one-day losses for the three major averages since April 2025. The Nasdaq Composite fell 5.5% and closed more than 10% below its most recent high, confirming a correction. The S&P 500 lost 4.4%, and the Dow fell more than 1,800 points, or 3.4%. S&P 500 companies lost nearly USD 3 trillion in market value, and the Magnificent Seven shed more than USD 1 trillion.

The trigger was Democratic election wins in the House, the Senate and key state governorships, which stoked concern that data center construction could slow and that regulation of artificial intelligence could tighten. After that rout, Nasdaq futures rose 1.45% on Friday while Dow futures fell 0.91%, and the S&P 500 followed with Monday's best day since April. The CBOE Volatility index had logged its biggest one-day jump in about 19 months on Thursday.

Inflation Data and Fed Signals

Headline CPI rose 0.4% in October, above the 0.3% forecast and down from 0.6% in September. Core CPI, which excludes food and energy, rose 0.3% against a 0.2% forecast. Energy prices rose 0.7% after a 5.2% jump in September, shelter rose 0.3% and food 0.5%, according to the Bureau of Labor Statistics. Transportation services and recreation each rose 0.8%, while used cars fell 1.2%. Annual figures were not provided because of the 2025 government shutdown.

Fed Governor Christopher Waller said in a speech on Tuesday at a Central Bank conference in London that he backs a December rate hike and opened the door to a larger half-point increase if inflationary pressures persist. He said the timing of hikes matters less than carrying out the promised increases within a reasonable period.

Rates, Dollar and Commodities

Treasury yields rose. The 2-year yield jumped 17.4 basis points to 4.721% and the 10-year rose 11.7 basis points to 4.979%, with the 30-year up 7.9 basis points to 5.335%. The dollar index rose 0.3% to 102.01, and gold fell 2% to USD 4,057 an ounce.

Oil prices dipped, with Brent crude falling below USD 90 a barrel for the first time since August after President Donald Trump said the war with Iran could end "fairly soon". Money markets price about 28 basis points of Fed tightening in December. Last week's employment report showed 165,000 jobs added in October, more than double forecasts.

Where Markets Stand Into December

The S&P 500 is down 0.7% after Monday's best day since April, Micron and Marvell are down 3% each and Nvidia more than 3%, the 10-year yield sits at 4.979% and the 2-year at 4.721%. Wholesale inflation arrives on Friday, the Fed decides on Dec. 9 and the November CPI report follows on Dec. 10.