Stocks retreated Wednesday after October’s consumer price reading showing the biggest annual jump in more than 30 years, triggering a spike in bond yields.
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The Dow Jones Industrial Average shed 240.04 points, or about 0.7%, to close at 36,079.94.
The S&P 500 fell 0.8% to 4,646.71.
The tech-heavy Nasdaq Composite dropped nearly 1.7% to 15,622.71.
The yield on the benchmark 10-year Treasury, which had trended lower in recent weeks, jumped by about 11 basis points Wednesday after the CPI reading. (1 basis point is 0.01 percentage points.) A poor auction in 30-year bonds that afternoon added steam to the spike.
As Treasury yields surged, investors dumped high-flying technology stocks and bid up bank stocks. They also sought refuge in gold and bitcoin.
Following the CPI data, traders moved up their expectations for when the first Fed rate hike would occur. The Fed funds futures market now sees greater odds of the central bank’s first full rate hike coming in July 2022.
Investors also looked outside of stocks and bonds for inflation hedges. Gold and bitcoin rose as investors sought assets that could hold up better as prices rise.
Reference: Reuters, CNBC
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