Stock Market Today: Dow, S&P 500 and Nasdaq Fall as Hot CPI Report Sparks Fed Rate Hike Fears

U.S. stocks fell on Tuesday as hotter-than-expected inflation data fueled concerns about interest rate hikes, interrupting Wall Street's recovery from last week's tech selloff. The Dow Jones Industrial Average fell about 0.6%, while the S&P 500 slipped 0.7% and the Nasdaq Composite dropped 0.9% in midday trading. Rising Treasury yields added pressure to growth-oriented stocks as investors reassessed the likelihood of a larger rate increase in December.

The declines followed Monday's rally, when the Dow surged more than 1,100 points, the S&P 500 gained 2.3%, and the Nasdaq climbed 2.7%. Tuesday's session was also shaped by corporate earnings, with Sanmina and AAON benefiting from strong AI infrastructure demand while Rocket Lab and Hims & Hers faced selling pressure. Meanwhile, falling oil prices provided some relief from energy-related inflation concerns, although the latest consumer price figures overshadowed those gains.

Market Movers:

• Sanmina (SANM) +21%: Shares surged in premarket trading after the electronics manufacturer reported fiscal fourth-quarter revenue of $3.86 billion and adjusted earnings of $4.43 per share, both exceeding Wall Street's expectations. The company also projected fiscal 2027 revenue of $17.5 billion to $19.5 billion, supported by strong demand for cloud computing and AI systems.
• AAON (AAON) +21.5%: Shares jumped in premarket trading after the heating and cooling equipment manufacturer reported record quarterly revenue of $707.4 million, up 84.1% from a year earlier. Its data center cooling business delivered particularly strong growth, reinforcing expectations for continued AI infrastructure investment.
• Take-Two Interactive (TTWO) +5%: Shares advanced as investors responded positively to strong preorder demand for Grand Theft Auto VI despite a softer-than-expected bookings outlook. Management reaffirmed the game's November 19 release date, helping offset concerns about near-term financial performance.
• Rocket Lab (RKLB) -7.8%: Shares declined after the space company reported a wider-than-expected quarterly loss despite revenue increasing 73% to approximately $268 million. Investors also reacted negatively to the postponement of its first Neutron rocket launch until at least 2027.
• Hims & Hers Health (HIMS) -10%: Shares fell after the telehealth company reported an unexpected quarterly loss and issued disappointing fourth-quarter revenue guidance. Although revenue increased 49% year over year, investors focused on the weaker profitability outlook.
• Digital Turbine (APPS) -35%: Shares plunged despite the mobile advertising company reporting encouraging quarterly results. Investors were concerned about plans for additional AI and data infrastructure investments, which could weigh on near-term profitability.

Hotter Inflation Report Raises Fed Rate Hike Expectations

October's consumer price index increased 0.4% from the previous month, exceeding economists' expectations of 0.3%, according to the Bureau of Labor Statistics. Core inflation, which excludes volatile food and energy prices, also rose 0.3%, above forecasts for a 0.2% increase. The figures suggested that underlying price pressures remain persistent despite recent declines in crude oil prices.

The report prompted investors to increase their expectations for another Federal Reserve rate hike in December, with the possibility of a larger half-percentage-point increase attracting attention. The two-year Treasury yield climbed to approximately 4.74%, while the benchmark 10-year yield approached 5%. Higher borrowing costs could create additional challenges for technology stocks, particularly companies whose valuations depend heavily on future earnings growth.

AI Infrastructure Earnings Highlight Diverging Investor Sentiment

Corporate earnings offered a mixed picture of the technology sector Tuesday. Sanmina's upbeat outlook reflected accelerating demand for cloud and AI systems, while AAON's strong results demonstrated continued investment in specialized cooling equipment for data centers. Their performances suggested that major technology companies are still committing substantial resources to expanding computing capacity despite recent concerns about infrastructure costs.

However, investors remain increasingly selective about which companies can benefit profitably from the AI boom. Digital Turbine's sharp decline highlighted concerns about spending commitments, while Nvidia faced additional pressure amid uncertainty surrounding CEO Jensen Huang. Attention now turns to CoreWeave's quarterly results, which could provide another important indication of AI infrastructure demand and the financial costs of supporting it.

Falling Oil Prices Provide Limited Relief

Oil prices extended their decline Tuesday as easing concerns about additional military action involving Iran reduced fears of supply disruptions. West Texas Intermediate crude fell toward $86 per barrel, while Brent slipped to approximately $91, reaching its lowest levels in roughly two months. The retreat followed a sharp decline Monday that helped fuel Wall Street's broad rally.

Lower energy prices could eventually ease pressure on consumers and businesses, particularly those facing elevated transportation and operating costs. However, Tuesday's inflation report demonstrated that price pressures extend beyond gasoline and crude oil. As a result, the energy market's decline was not enough to offset concerns about persistent inflation and tighter monetary policy.

Looking Ahead

Wall Street's attention remains focused on the Federal Reserve's December meeting after October's inflation report strengthened expectations for additional monetary tightening. Investors will be watching Treasury yields and upcoming economic data for signs that price pressures are easing, while technology earnings could help determine whether the recent AI stock recovery can regain momentum. CoreWeave's results and further developments surrounding Nvidia will also be closely watched as investors reassess the outlook for AI infrastructure spending. With inflation concerns resurfacing and corporate earnings producing sharply different reactions, volatility could remain elevated throughout the week.