Wall Street slips as heating inflation stokes Fed hike expectations

Stocks on Wall Street declined as US consumer prices rose at a faster pace in October than economists predicted, stoking expectations that the Federal Reserve will raise interest rates next month.

Nvidia sank for a second day as investors continued to digest the probe into chief executive Jensen Huang, while Anthropic announced plans to raise as much as US$64.35 billion in an initial public offering.

Oil prices extended their decline as US President Donald Trump said there was momentum to bring the conflict with Iran to an end, while defence secretary Pete Hegseth criticised efforts to impeach him over the war.

And Australian futures are pointing to a soft start to the trading day for the ASX, with Radius Residential Care’s first-half result on the local calendar.

It’s getting hot in here

Bond traders were pricing in an 89% chance of the federal open market committee raising the federal funds rate at the December meeting after US Labor Department figures showed consumer prices rose 0.4% last month, a faster pace than the 0.3% economists had forecast.

Speaking before the release, Fed governor Chris Waller said he would support a rate hike in December and that a firm inflation reading could put a 50 basis point increase on the table.

“None of his colleagues have echoed the case for a larger move so far,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note, referring to Waller. “Another option for the Fed would be to signal that back-to-back hikes in December and January are increasingly likely.”

The yield on US 10-year treasuries climbed 14 basis points to 5.01% at 7am in Auckland. New Zealand’s equivalent was at 4.62%, and the kiwi dollar dropped to 55.92 US cents at 7am from 56.34 cents yesterday.

Stocks on Wall Street pulled back as bond yields rose, with the S&P 500 down 0.8% and the Nasdaq Composite falling 1.4%. The Dow Jones Industrial Average was down 0.6%, with Nvidia sliding 6.2%, leading the blue-chip index lower

The chipmaker remained out of favour as investors continued to digest the probe into whether CEO Huang had been the target of foreign intelligence, with the Federal Bureau of Investigation also looking into the matter.

On the road again

Meanwhile, Anthropic’s IPO gathered pace with the Claude developer unveiling plans to sell 825 million shares at US$70-to-US$78 each, potentially valuing the artificial intelligence giant at as much as US$1.4 trillion on a diluted basis.

Taiwan Semiconductor Manufacturing Co said it intended to buy up to US$500 million of Anthropic shares at the IPO price, and would invest a similar amount in OpenAI.

Neocloud firm CoreWeave, which leases AI infrastructure, is due to report after the bell, with the sector coming under heightened scrutiny in recent weeks.

Bloomberg reported International Business Machines was ending its immigration sponsorship for some roles in its consulting division after the White House’s crackdown on the visa programme.

Local favourite Rocket Lab recovered from an after-hours trading decline as it rose 2% to US$60.02 at 7am in Auckland, having reported record quarterly sales and a US$3.57 billion backlog of orders.

Telehealth company Hims & Hers Health tumbled 19% after third-quarter earnings missed expectations.

Stock markets across the Atlantic were mixed, with the UK’s FTSE 100 dipping 0.3%, while Germany’s DAX rose 0.3% and France’s CAC 40 advanced 0.6%.

Brent crude oil futures slipped 0.8% to US$91.82 a barrel at 7am as President Trump continued to talk up an end to the conflict with Iran, saying the war was effectively over following talks with Qatari prime minister Mohammed bin Abdulrahman Al Thani, who’s been pushing for peace in the region.

Meanwhile, Hegseth defended himself against impeachment efforts brought by Republican representative Thomas Massie, who claims the defence secretary unlawfully started the Iran war and ignored a congressional resolution to remove troops from the conflict.

The subdued tone is set to continue in the antipodes, with Australian futures pointing to a 0.7% decline for the S&P/ASX 200 index when trading opens across the Tasman.

No local data are scheduled for today, while Radius Care is due to report earnings for the six months ended Sept 30, with the firm’s occupancy rate in view after a strong flu season.

Reporting by Paul McBeth. Image from engin akyurt on Unsplash.