Nasdaq 100 underperforms as hot CPI and Nvidia drag US indices lower

• About a sixth of Monday's rebound erased across NASDAQ, SPX and DJIA.
• 5% breached by the 10-year yield as Fed Governor Waller raises the prospect of a half-point December hike.
• 1.3% September surge precedes Friday's October producer price release.

About a sixth of Monday's rebound has been erased across all three US stock indices. A strong October Consumer Price Index (CPI) reading and discussion of a half-point Fed rate increase prompted the retreat. Having surrendered about half of Monday's advance and touched a session low just above 27,400, the Nasdaq 100 now trades back near 27,750. Meanwhile, the S&P 500 stands near 7,525, with the Dow Jones Industrial Average near 52,250.

At 0.4%, October's consumer price increase exceeded the 0.3% forecast. Fed Governor Waller had indicated that an upside surprise of this kind could warrant a half-point December rate rise. No annual reading accompanied the release because the 2025 government shutdown left October 2025 without a figure. The annual rate returns on December 10, one day after the Fed's decision. Back above 5%, the 10-year Treasury yield is weighing on equity valuations: higher yields reduce what stock buyers will pay for future earnings.

After trailing Monday's rally, Nvidia (NVDA), the world's most valuable company, is declining and pulling all three indices lower. Its retreat comes after Chief Executive Jensen Huang admitted to an affair with a woman accused of spying for China. With a greater weighting in chip stocks than the other two benchmarks, the NASDAQ 100 is recording the largest fall of the three.

Key releases and Fed speakers

Tuesday's speaking schedule includes Fed Vice Chair for Supervision Bowman and Philadelphia Fed President Paulson at 23:30 GMT. Cleveland Fed President Hammack follows on Thursday at 14:00 GMT. Each has a vote on the December 8-9 decision. Traders regard a rate rise as close to certain, making their remarks relevant to the size of the increase.

A rise to 195K from 189K is forecast for weekly jobless claims, due on Thursday at 13:30 GMT. Friday brings October producer prices at 13:30 GMT, with a 0.4% increase expected following September's 1.3% surge. That release is the next inflation reading relevant to the prospect of a half-point hike.

NASDAQ 100 recovers about a quarter of its decline

About a quarter of the NASDAQ 100's decline from its October 6 peak near 31,350 has now been recovered. For the S&P 500, the recovery from the November 6 low near 7,325 towards October's peak just below 7,850 is about two-fifths complete. Since mid-September, the Dow Jones Industrial Average has stayed within a 50,500-53,800 range and now sits near its midpoint.

Daily chart: Nasdaq 100 index