Inflation Came in Hotter Than Expected and a New Rate Hike is All But Given. Stocks Fell.

Stocks fell on Tuesday after October's inflation reading came in hotter than expected and a rate hike by the Federal Reserve in December is all but given.

The Dow Jones Industrial Average dropped 0.30%, while the S&P 500 did so 0.38%. The tech-heavy Nasdaq Composite underperformed, decreasing by 0.74%. The index was again dragged by Nvidia, which is reeling from its CEO Jensen Huang's infidelity scandal with an alleged Chinese operative. The stock fell another 5.5% and has plummeted more than 25% over the last month.

The Bureau of Labor Statistics detailed that the Consumer Price Index climbed 0.4% last month, compared to the 0.3% expected by analysts. Core CPI, which excludes more volatile components like food and energy, also climbed 0.3%, compared to the 0.2% expected.

In fact, Federal Reserve Governor Christopher Waller said on Monday he would back "more robust action" if the inflation reading was higher than expected. "In that case, I believe a 50 basis point hike in the policy rate should be considered at the December meeting," he said, adding that a quarter-point hike "would put our credibility at risk, a risk I am not eager to take."

Chances of a hike to the 4%-4.25% range stand at 90.5%, according to the CME Group's FedWatch tool, while odds of a half-point one clocked in at 9.5%.

Elsewhere, Anthropic is seeking to raise as much as $62.5 billion in one of the largest initial public offerings in history, with the Claude AI developer targeting a valuation of more than $1 trillion as it prepares to list on Nasdaq.

The company plans to sell approximately 801.4 million new shares at $70 to $78 each, according to an amended registration statement filed with the Securities and Exchange Commission Tuesday.

Existing shareholders will sell another 23.6 million shares, bringing the total public offering to 825 million. Anthropic will not receive proceeds from those secondary sales. The IPO could provide a boost that helps tech stocks rebound or be dragged by the current context and fall right after going public.

At the top of the proposed price range, the company's equity valuation would exceed $1 trillion, while its fully diluted valuation, which accounts for shares that may be issued through options and other securities, would be approximately $1.4 trillion. That is below earlier market expectations of a valuation approaching $2 trillion.

Seven major technology companies have also committed to purchasing $26 billion worth of Anthropic's nonvoting Class N shares in a separate private placement tied to the IPO.

The investors include Google, Nvidia, Advanced Micro Devices, Broadcom, Micron Technology, Microsoft and TSMC Partners. Their shares will be priced at the final IPO price, subject to the terms outlined in the filing.