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Wall Street Wobbles: Inflation, Fed Fears Hit Markets
11 Nov
Summary
- October CPI rose 0.4% MoM, exceeding expectations.
- Fed officials signal continued rate hikes to curb inflation.
- Nvidia shares dropped 10% over two sessions after scandal.
Benchmark indices saw profit-taking on Tuesday, November 11, following Monday's gains. Wall Street sentiments were affected by three key factors, leading to intraday volatility.
October's Consumer Price Inflation (CPI) data revealed a higher-than-anticipated 0.4% month-on-month increase, largely due to rising shelter and fuel costs. Core CPI also surpassed estimates.
Federal Reserve officials underscored the necessity of further rate hikes to manage inflation. Governor Christopher Waller indicated that more hikes might be necessary, with the possibility of a 50 basis point increase. Dallas Fed Chief Lorie Logan suggested at least two 25 basis point hikes, and Kansas City Fed Chief Jeff Schmid commented on the insufficient restrictiveness of current rates.
These statements intensified worries about future rate increases, with market probabilities reflecting a high likelihood of a December rate hike. Separately, Nvidia's stock experienced a continued slump, falling 6% on Tuesday, adding to a 10% drop over two sessions. This decline pressured the S&P 500 and Nasdaq, though other semiconductor stocks saw gains.
