Prices for beef, electricity and other items that consumers paid in October surged from year-ago levels at the fastest overall pace since 1990, raising expectations in the market that the Federal Reserve will have to raise short-term interest rates more quickly off their record low.
Rising yields tend to be a drag on stocks, particularly those seen as the most expensive or whose expectations for big profit growth is furthest in the future.
It’s on pace for a second straight drop, though it’s coming off a string of setting a record high in each of eight straight days.
The Dow Jones Industrial Average was down 258 points, or 0.7%, at 36,061.
Bitcoin, which some proponents see as also offering protection against inflation like gold, likewise climbed.
Pushed by the inflation report, investors are now pricing in a 64% chance that the Fed will raise rates at least once by June.
In the stock market, higher yields tend to favor stocks that look cheap, or at least cheaper than their peers.
Tesla also regained some of its lost ground from the prior two days after its CEO, Elon Musk, said that he would sell 10% of his stake in the company.
Stocks have been rising broadly in recent weeks, powered by reports showing corporate profits were even stronger during the summer than analysts expected.