Hot October Inflation Lifts 10-Year Yield Above 5% and Drags Nvidia Below $4 Trillion

The consumer price index rose 0.4% in October from September, according to the Bureau of Labor Statistics, above the 0.3% economists had forecast. Core prices, which exclude food and energy, rose 0.3% against expectations of 0.2%, matching September's gain. Headline prices had risen 0.6% in September.

The bureau did not publish an annual rate because the 2025 federal government shutdown stopped it from collecting prices for October 2025. Annual inflation was 3.7% in September, according to Reuters.

Energy prices rose 0.7% in October, with gasoline up 1% and electricity up 0.9%, CNBC reported from the release. Food rose 0.5% and shelter 0.3%, and the BLS said shelter accounted for more than 30% of the headline increase. Economists pointed to the jump in oil prices caused by the US-Israeli war with Iran, and to tariffs imposed last year. "The oil shock has seeped into core," Brian Jacobsen of Annex Wealth Management told Reuters.

The Fed held its target range at 3.75% to 4% in October on a 10-2 vote. Before the data came out on Tuesday, Governor Christopher Waller said the central bank should raise rates next month even if inflation had cooled, and should consider a half-point increase if the picture got worse. After the release, traders fully priced a quarter-point hike at the December 8-9 meeting, and the CME FedWatch tool put the chance of a half-point move at 13.6%, up from about zero before the report, according to CNBC. Dallas Fed President Lorie Logan called the reading "higher than expected" and said she sees a need for two more quarter-point increases, CNBC reported.

"This was the report the market could least afford to see," Karen Manna of Federated Hermes said, according to CNBC.

Bond yields moved sharply. The two-year yield jumped 13 basis points to 4.68% shortly after the release, Reuters reported, and by the afternoon the 10-year yield was up more than 14 basis points at 5.004%, according to CNBC.

Stocks gave back part of Monday's rebound, when the Nasdaq-100 rose 3.4%. In late trading the S&P 500 was down 0.4%, the Dow Jones Industrial Average was down 156 points, or 0.3%, and the Nasdaq Composite was down 0.7%, according to CNBC's figures. Those levels may not be final closing prices.

Nvidia was the heaviest drag. Its shares fell about 7% to around $165.94, briefly taking the chipmaker's market value below $4 trillion, a level it had held since July 9, 2025, CNBC reported. The stock is under pressure from an independent board investigation tied to chief executive Jensen Huang's admitted affair with a woman US authorities accuse of spying for China. Microsoft fell 3% in a sudden move after Anthropic announced new Claude workplace tools that could compete with its Office software.

Gold also fell. Spot gold had already dropped 1.5% to $4,078.53 an ounce in London trading after Waller's comments, and it was down 2% at $4,057 after the inflation data, according to Reuters.

The figures hit just as Anthropic markets its initial public offering. On Tuesday the company set a range of $70 to $78 a share for 825 million shares, which would value it at up to $1.405 trillion on a fully diluted basis at the top of the range. CNBC has reported that public investors have grown more sceptical of the AI trade because higher interest rates could make debt unaffordable for companies building expensive infrastructure.

The next data point is US producer price figures, due on Friday, before the Fed's December 8-9 meeting.