Stocks Sink at Midday as Hot Inflation Revives Rate-Hike Fears

Wall Street's early optimism evaporated by midday. As of 11:41 AM ET, the Nasdaq Composite was down 1.09%, sitting at 24,987, while the S&P 500 slipped 0.79% to 7,490 and the Dow Jones Industrial Average fell 0.70% to 52,039.

The culprit: October inflation came in hotter than expected, reviving fears that the Federal Reserve could raise interest rates in December — and hike again in 2027. Comments from Fed officials piled onto the unease. The 10-year Treasury yield climbed 0.12% to 5.02%, while gold dropped 2.82% to $4,023.75.

Higher rates make borrowing pricier and can squeeze corporate profits, a particular worry for growth stocks — and for AI firms that have taken on heavy debt to fund infrastructure. Basic materials took the biggest hit, with tech close behind. Energy was the lone bright spot, helped by falling oil prices on hopes the conflict in Iran may be winding down.

Among individual names, Sanmina jumped nearly 4% on strong fiscal 2027 guidance, though the stock gave back some of a premarket surge. Sally Beauty climbed after beating fourth-quarter earnings estimates, while Rocket Lab traded muted on mixed results. Nvidia stayed under pressure as fallout continued from the board's investigation into CEO Jensen Huang's conduct.

Next up for investors: CoreWeave reports after the bell, with its AI spending and financing under the microscope. The Motley Fool separately flagged its 10 best stocks to buy now, and Invesco QQQ Trust didn't make the cut.