NASDAQ Retreats as NVIDIA Drops 6%, S&P 500 Falls on Hotter Inflation Data

What to Know

• The S&P 500 moved lower as traders reacted to October inflation data that exceeded analyst expectations.
• Inflation increased by 0.4% month over month in October, compared with an analyst forecast of 0.3%.
• Core inflation rose by 0.3%, above the analyst estimate of 0.2%.
• FedWatch Tool pricing showed a 90.5% probability of a 25 bps rate hike at the December meeting and a 9.5% probability of a 50 bps increase.
• The 2-year Treasury yield climbed above 4.74%, while the 10-year Treasury yield settled near the psychologically important 5.00% level.
• The NASDAQ retreated as technology stocks came under pressure from a more hawkish Federal Reserve policy outlook.
• NVIDIA dropped 6% and remained under pressure as analysts rushed to downgrade the stock amid a spy scandal.
• The Dow Jones also moved lower, with NVIDIA ranking as the biggest loser in the index during the session.
• Oil prices rebounded from session lows but stayed negative as traders assessed whether the U.S. and Iran were moving toward a deal.

U.S. Stocks Slide as Inflation Alters the Rate Outlook

U.S. stock indices came under pressure as traders absorbed inflation data that pointed to persistent price pressure and reduced the perceived room for the Federal Reserve to pause. The S&P 500 lost ground after October inflation increased by 0.4% month over month, exceeding the analyst forecast of 0.3%. Core inflation, which strips out more volatile components, rose by 0.3%, also above the analyst estimate of 0.2%.

The hotter inflation figures were enough to shift the market’s focus back toward the risk of tighter monetary policy. Equity traders had little incentive to chase risk assets while inflationary pressure appeared to be increasing and Treasury yields were moving higher. For stock markets, the combination of sticky inflation and a more hawkish central bank outlook often creates a difficult backdrop because it can pressure valuations and raise the hurdle for future earnings growth.

Market pricing quickly reflected the change in expectations. FedWatch Tool data indicated a 90.5% probability of a 25 bps rate hike at the next Federal Reserve meeting in December. The probability of a 50 bps move was estimated at 9.5%. The market therefore appeared to rule out a scenario in which policymakers leave rates unchanged at that meeting, adding to the negative tone across major indices.

Treasury Yields Add Pressure to Equity Valuations

Treasury yields moved higher as bond traders responded to the hotter inflation data and the shift in Federal Reserve expectations. The yield on 2-year Treasuries climbed above the 4.74% level, while the yield on 10-year Treasuries settled near the psychologically important 5.00% level.

Rising yields acted as a bearish catalyst for stocks. Higher Treasury yields can draw capital away from equities by offering more competitive returns in government bonds. They can also weigh on growth-oriented shares because a higher discount rate reduces the present value of future earnings. This dynamic is especially important for technology and other long-duration sectors, where investors often pay a premium for expected future growth.

The move in yields also reinforced the idea that the inflation report had consequences beyond a single trading session. If the bond market continues to price in a more restrictive Federal Reserve path, stock indices may struggle to build sustainable upside momentum unless incoming data begins to ease concerns about inflationary pressure.

S&P 500 Tests Key Downside Levels

The S&P 500 was attempting to settle below the 7500 level as selling pressure persisted. A successful move below that area would put the nearest support zone at 7470 to 7480 in focus. Technical traders are watching this range closely because a break below nearby support could encourage additional short-term selling and signal that bearish momentum remains in control.

On the upside, the S&P 500 needs to climb above resistance at 7550 to 7560 to have a chance to gain upside momentum in the near term. If buyers manage to reclaim that area, the index could move toward the next resistance zone at 7620 to 7630. Until then, the path of least resistance remains closely tied to inflation expectations, Treasury yields, and the market’s view of the Federal Reserve’s December decision.

Sector performance showed a mixed internal picture. Financial and consumer defensive stocks were among the biggest gainers, suggesting that some investors continued to favor areas considered more resilient in a tougher macro environment. Basic materials stocks, however, came under strong pressure as traders reacted to the sell-off in precious metals markets.

NASDAQ Retreats as NVIDIA Extends Losses

The NASDAQ pulled back as traders sold technology stocks amid the more hawkish Federal Reserve policy outlook. Growth shares were sensitive to the rise in Treasury yields, and the broader tech complex had to contend with additional pressure from weakness in one of the market’s key artificial intelligence names.

NVIDIA fell 6% and was among the biggest losers in the NASDAQ index. The company’s shares remained under pressure as analysts rushed to downgrade the stock amid a spy scandal. Because NVIDIA has been a major focus for artificial intelligence-related trading, weakness in the stock carried broader sentiment implications for the technology sector.

For the NASDAQ, the immediate technical picture is centered on the 27,500 level. If the index manages to settle below 27,500, it could head toward support at 27,100 to 27,150. That range may become an important test of whether buyers are willing to defend the recent decline or whether sellers remain in control.

On the upside, a successful test of resistance at 27,950 to 28,000 would open the way for a move toward the next resistance area at 28,800 to 28,850. For now, however, traders are balancing the possibility of dip-buying in leading technology names against the reality of higher yields and a Federal Reserve outlook that has become less supportive for risk assets.

Dow Jones Weakens With Broader Market Pullback

The Dow Jones also moved lower as the broader equity market retreated. NVIDIA was the biggest loser in the Dow Jones index during the session, underscoring how weakness in a single high-profile technology stock can influence multiple major benchmarks when investor sentiment is fragile.

The index was attempting to settle below 52,000. If the Dow Jones declines below the 50 MA at 52,106, technical traders will watch for a move toward the support zone at 51,400 to 51,500. A move below 51,400 would put the 50,800 level in focus and could increase concerns that the pullback is gaining momentum.

On the upside, a move above 52,400 would open the way to a test of resistance at 52,800 to 52,900. This creates a clearly defined near-term range for traders monitoring whether the Dow Jones can stabilize or whether pressure from yields, inflation, and technology-sector weakness continues to dominate.

Geopolitical Headlines Remain on the Radar

Traders also monitored news from the Middle East. Oil prices rebounded from session lows but remained in negative territory as market participants bet that the U.S. and Iran were moving toward a deal. At the same time, some traders were prepared to buy the dip, suggesting that conviction around the oil move was not one-sided.

It remains uncertain whether the U.S. and Iran are ready for a deal in the near term. Oil market dynamics did not have a material impact on stocks during the session, but traders are likely to remain focused on geopolitical headlines in upcoming trading sessions. Energy prices can influence inflation expectations, and inflation expectations are central to the current market debate around the Federal Reserve’s next move.

For equity investors, the near-term setup remains delicate. Hotter inflation data has strengthened the case for another rate hike, Treasury yields have moved higher, and one of the market’s most important technology stocks is under pressure. Until the major indices reclaim key resistance levels, technical traders may remain cautious about chasing rebounds.

Frequently Asked Questions (FAQs)

Why did the S&P 500 move lower?

The S&P 500 moved lower because October inflation data exceeded analyst expectations, prompting traders to price in a more hawkish Federal Reserve policy outlook and pushing Treasury yields higher.

What was the October inflation reading?

Inflation increased by 0.4% month over month in October, compared with an analyst forecast of 0.3%. Core inflation rose by 0.3%, above the analyst estimate of 0.2%.

What are markets expecting from the Federal Reserve in December?

FedWatch Tool pricing indicated a 90.5% probability of a 25 bps rate hike at the December meeting and a 9.5% probability of a 50 bps rate hike.

Why are Treasury yields important for stocks?

Higher Treasury yields can pressure stocks by making bonds more attractive and by increasing the discount rate applied to future earnings, a factor that often affects growth and technology shares.

Why did the NASDAQ decline?

The NASDAQ declined as traders sold technology stocks in response to the hawkish shift in Federal Reserve expectations and rising Treasury yields.

What happened to NVIDIA?

NVIDIA fell 6% and remained under pressure as analysts rushed to downgrade the stock amid a spy scandal, making it one of the biggest losers in the NASDAQ and the biggest loser in the Dow Jones during the session.

What S&P 500 levels are traders watching?

Traders are watching whether the S&P 500 settles below 7500. If it does, support at 7470 to 7480 comes into focus, while resistance stands at 7550 to 7560 and then 7620 to 7630.

What NASDAQ levels matter now?

If the NASDAQ settles below 27,500, it could move toward support at 27,100 to 27,150. On the upside, resistance at 27,950 to 28,000 must be cleared to open the way toward 28,800 to 28,850.

What Dow Jones levels are in focus?

The Dow Jones is being watched around 52,000 and the 50 MA at 52,106. A decline below that area could point to 51,400 to 51,500, while a move above 52,400 could lead to a test of 52,800 to 52,900.