US STOCKS-Wall St falls as hot inflation data fuels rate-hike jitters

Wall Street's main ‌indexes ​retreated on Tuesday, pausing a two-day rebound in tech shares, after a hotter-than-expected October inflation reading reinforced fears that the Federal Reserve could keep interest rates higher for longer. Earlier in the day, Fed Governor Christopher Waller said the central bank should raise ‌interest rates by at least 25 basis points next month even if inflation cooled in October. If price pressures accelerated, policymakers should consider a half-percentage-point increase, he said.

Traders are pricing in an almost 99% chance of a hike in December, according to the CME FedWatch tool. "There are some fears that underlying price pressures are starting to build again. ‌It creates some concern," said James McCann, senior economist at Edward Jones.

"Markets had been pricing out some of the Fed tightening in recent weeks. Now it's probably ‌being forced to contemplate a bit more tightening." At 09:47 a.m. ET, the Dow Jones Industrial Average fell 257.10 points, or 0.49%, to 52,132.65, the S&P 500 lost 45.94 points, or 0.61%, to 7,504.00 and the Nasdaq Composite lost 188.00 points, or 0.74%, to 25,065.14.

Among rate-sensitive sectors, financials rose 0.15%, while utilities and real estate were among the laggards. Nine of 11 major S&P 500 sectors were in negative territory.

NVIDIA, ANTHROPIC ⁠TEST AI ​SENTIMENT Shares of Nvidia, the second-most valuable ⁠company in the world, slipped 4.4%.

Jensen Huang's affair with Chinese businesswoman Alice Huang, alleged to be a spy for Beijing, facilitated the shipment of at least $7.5 billion worth of the company's chips through Chinese firms, The ⁠Information reported. As CEO of the company at the heart of the AI boom, Huang's leadership and future at Nvidia are crucial to investors.

Other chip makers were subdued, with the ​broader semiconductor index declining 0.9% after two consecutive sessions of gains, reflecting increasing volatility in the AI trade. Attention is also turning to Anthropic's expected public listing later this ⁠month. The AI lab revealed that its initial public offering is expected to raise as much as $64.4 billion, giving the company a fully diluted valuation of up to $1.4 trillion.

A listing by Anthropic could also ⁠force ​other AI heavyweights to compete harder for investor dollars. Neocloud firm CoreWeave is expected to report quarterly earnings after market close on Tuesday. Questions about the sustainability of the AI boom and the company's debt burden have pressured the stock recently.

Shares of CoreWeave edged 0.8% higher, while those of its peer Nebius fell 1%. Media giant Skydance ⁠dropped 9% after it announced cost-cutting plans and warned that the underperformance of Warner Bros' film slate would impact fourth-quarter profit by up to $200 million.

Still, cooling oil prices ⁠offered some comfort, with Brent crude futures slipping ⁠below $90 a barrel for the first time since August. Declining issues outnumbered advancers by a 4.01-to-1 ratio on the NYSE, and by 2.63-to-1 ratio on the Nasdaq.

The S&P 500 posted 4 new 52-week highs and 3 new lows while the Nasdaq Composite ‌recorded 23 new highs and ‌84 new lows.