The S&P 500 Index SPY closed down -0.38% on Tuesday, the Dow Jones Industrial Average DIA closed down -0.30%, and the Nasdaq 100 Index QQQ closed down -0.60%. December E-mini S&P futures (ESZ26) fell -0.38%, and December E-mini Nasdaq futures (NQZ26) fell -0.60%.
US stock indices settled lower on Tuesday as hawkish Fed speak and rising US price pressures bolstered the outlook for tighter Fed policy. Tuesday’s stronger-than-expected US Oct CPI report pushed up bond yields and weighed on stocks. The 10-year T-note yield rose +10 bp to 4.99%, and the chance of a Fed rate hike at next month’s FOMC meeting rose to 100% from 82% on Monday.
Join 200K+ Subscribers: Find out why the midday Barchart Brief newsletter is a must-read for thousands daily.US Oct CPI rose +0.4% m/m, stronger than expectations of +0.3% m/m. Oct core CPI rose +0.3% m/m, stronger than expectations of +0.2% m/m. The Bureau of Labor Statistics did not publish year-over-year data for Oct 2026 CPI because it had no October 2025 data due to the federal government shutdown.
Hawkish Fed comments on Tuesday spurred stock losses and pushed bond yields higher. Fed Governor Christopher Waller said he supports a Fed rate hike in December and warned that if inflation continues to accelerate, he will support a half-percentage-point increase to protect the Fed's credibility. Also, Dallas Fed President Lorie Logan said, "It remains clear to me, given the current outlook, that the FOMC needs to implement at least two more 25 bp rate increases." She added that while the pace of hikes will depend on economic data and financial conditions, "It may be possible to move more rapidly this winter than the FOMC has moved so far this fall." In addition, Kansas City Fed President Jeff Schmid said current Fed policy is "fairly accommodative" and is supporting the economy rather than restraining it.
Stocks found some support Tuesday after WTI crude oil prices fell to a 2.5-month low, easing inflation expectations and boosting market sentiment. Also, chipmakers recovered from their worst levels Tuesday after Advanced Micro Devices, Broadcom, Nvidia, and others announced a $26 billion investment in Anthropic.
Dec WTI crude oil prices (CLZ26) fell nearly -1% on Tuesday and posted a 2.5-month low on Iran war de-escalation optimism. Qatar's Foreign Ministry said there have been "positive responses" from the US and Iran to mediation efforts, which are ongoing.
However, Iran continues to assault ships going through the Strait of Hormuz, and the US has twice launched limited strikes on Iran's Qeshm Island since early last week. Also, risks to Middle Eastern energy infrastructure persist after Saudi Arabia's East-West pipeline was targeted Monday in the Medina region by Houthi Rebels.
Stocks are supported by the prospect of solid quarterly earnings. According to data compiled by Bloomberg Intelligence, Q3 S&P 500 earnings are expected to climb by +31% from a year earlier, up from a July estimate of 22%. As of Tuesday, 450 of the S&P 500 companies have reported results, with 84% beating estimates.
Overseas stock markets settled higher on Tuesday. The Euro Stoxx 50 climbed to a 2-month high and closed up +0.59%. China’s Shanghai Composite closed up +0.08%. Japan's Nikkei-225 Stock Average closed up +2.87%.
December 10-year T-notes (ZNZ6) closed down -26 ticks on Tuesday. The 10-year T-note yield rose +10.3 bp to 4.985%. Dec T-notes fell to a 1.5-week low on Tuesday, and the 10-year Y-note yield rose to a 1.5-week high of 5.019%. T-note prices slumped on Tuesday today after US Oct CPI rose more than expected. Also, hawkish Fed comments on Tuesday pressured T-note prices after Fed Governor Waller, Dallas Fed President Lorie Logan, and Kansas City Fed President Jeff Schmid all said they favored tighter Fed policy.
Weak demand for the Treasury’s $42 billion 10-year T-note auction on Tuesday also weighed on T-note prices. The auction had a bid-to-cover ratio of 2.46, below the 10-auction average of 2.54.
The markets are now pricing in a 100% chance of a +25 bp rate hike at the FOMC’s next meeting on December 8-9.
European government bond yields moved higher on Tuesday. The 10-year German bund yield rose +5.6 bp to 3.319%. The 10-year UK gilt yield rose +9.4 bp to 5.223%.
ECB Chief Economist Philip Lane said, "If the information set we have in December is exactly the same as the information set today, then I think it would be prudent indeed to hike" interest rates.
ECB Governing Council member Martins Kazaks said a "hawkish edge" is appropriate for monetary policy, and "so far, it seems that some further tightening from today's perspective would be warranted."
ECB Governing Council member and Bundesbank President Joachim Nagel said that consumer price gains are "too high" and a December rate hike by the ECB is "rather obvious."
The markets are now pricing in a 92% chance of a +25 bp rate hike at the ECB’s next policy meeting on December 17.
Home builders and building suppliers retreated on Tuesday after the 10-year T-note yield jumped to a 1.5-week high, raising mortgage rates and undercutting housing demand. Lennar LEN closed down more than -5%, and Builders Firstsource BLDR closed down more than -4%. Also, DR Horton DHI and Pulte Group PHM closed down more than -3%, and KB Home KBH and Toll Brothers TOL closed down more than -2%.
Cryptocurrency-exposed stocks slid Tuesday after Bitcoin IREN closed down more than -7%, and Strategy MSTR and Circle Internet Group CRCL closed down more than -3%. Also, BitMine Immersion Technologies BMNR, Coinbase Global COIN, Bullish BLSH, Galaxy Digital Holdings GLXY, and Robinhood Markets HOOD closed down more than -2%.
Defensive health insurance stocks rallied Tuesday as the overall market declined. CVS Health Corp CVS closed up more than +4%, and Humana HUM closed up more than +3%. Also, Elevance Health ELV, Centene CNC, and the Cigna Group CI closed up more than +2%. In addition, UnitedHealth Group UNH closed up more than +1% to lead gainers in the Dow Jones Industrials, and Cardinal Health CAH and Molina Healthcare MOH closed up more than +1%.
Groupon GRPN closed down more than 22% after cutting full-year sales guidance to $500 million to $503 million from a previous estimate of $513 million to $523 million, below the consensus of $518.63 million.
On Holding ONON closed down more than -7% after reporting weaker-than-expected Q3 direct-to-consumer net sales.
Nvidia NVDA closed down more than -5% to lead losers in the Dow Jones Industrials and the Nasdaq 100 and added to Monday’s -4% decline after the company’s board launched an investigation into CEO Huang, following his admission of an affair with a woman identified as a suspected Chinese spy.
Casella Waste Systems CWST closed down more than -5% after reporting Q3 revenue of $559.2 million, below the consensus of $563.3 million.
GE Vernova GEV closed down more than -3% after Softbank Group wrote down a -$3.7 billion loss over its AI data center projects in the US.
AAON Inc. AAON closed up more than +19% after reporting preliminary Q3 net sales of $707.4 million, well above the consensus of $603.4 million.
Charter Communications CHTR closed up more than +10% to lead gainers in the S&P 500 after announcing plans to buy back about $1.5 billion of debt for cash.
Take-Two Interactive Software TTWO closed up more than +8% to lead gainers in the Nasdaq 100 after forecasting Q3 net bookings of $3.35 billion to $3.50 billion, the midpoint above the consensus of $3.37 billion.
Sanmina SANM closed up more than +4% after reporting Q4 net sales of $3.86 billion, better than the consensus of $3.48 billion, and forecasting 2027 revenue of $17.5 billion to $19.5 billion, well above the consensus of $16.6 billion.
Broadcom AVGO closed up more than +3%, and Advanced Micro Devices AMD closed up more than +1% after announcing investments in Anthropic.
Onto Innovation ONTO closed up more than +2% after reporting Q3 adjusted EPS of $2.44, above the consensus of $2.30, and forecasting Q4 adjusted EPS of $2.59 t $2.79, stronger than the consensus of $2.46.
Venture Global VG closed up more than +2% after reporting Q3 revenue of $4.76 billion, above the consensus of $4.60 billion.
Corteva Inc (CTVA), Tetra Tech Inc (TTEK), Vylor Inc (VYLR).
On the date of publication, Rich Asplund did not directly have a position in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.For more information please view the Barchart Disclosure Policy here.
- The 1 Number CoreWeave Bulls Are Ignoring After Today’s Rally
- Disney Raised Its Dividend by 50% Last Year. Don’t Expect a Similar Bonanza This Time.
- Anthropic Inks Massive $3.4 Billion Deal for Data Center Power Before Blockbuster IPO
- Nvidia Stock Plunges After Hours as Reports of a Second Jensen Huang Relationship Could Force the CEO Out