Stocks close lower as hot CPI lifts the 2-year yield 17 basis points: S&P 500 -0.4%, Nvidia -5.5%

Stocks slipped on Tuesday as a hotter-than-expected inflation report pushed up the odds and the size of a December Fed rate hike. The S&P 500 fell 0.38% to 7,520.93, the Dow Jones Industrial Average lost 0.30% to 52,231.89 and the Nasdaq Composite dropped 0.74% to 25,065.88, per Yahoo Finance closing data. The damage was mild next to the move in bonds: the 2-year Treasury yield jumped 17 basis points in a day.

The closing scoreboard

Sources: Yahoo Finance closing data for indexes, VIX, oil and gold, with percent changes our arithmetic; U.S. Treasury daily par yield curve for yields. Futures are the continuous front-month contracts Yahoo lists.

What moved: inflation and the Fed

The Bureau of Labor Statistics reported that consumer prices rose 0.4% in October against 0.3% expected, with core up 0.3% against 0.2%, as we detailed in our CPI report. Fed Governor Christopher Waller said in London that he leans toward a quarter-point hike in December and that a half-point "should be considered" if inflation ran hot, according to CNBC. After the report, traders fully priced a quarter-point increase on Dec. 8-9 and gave a half-point about a 14% chance, per CME FedWatch figures cited by CNBC and in our Fed-hike explainer.

The number behind the number: the rate market, not stocks

Stocks lost under 1% on a day when short-term rates repriced sharply. Treasury's own curve shows the 2-year at 4.73%, up from 4.56% on Monday, and the 10-year at 4.98%, up from 4.88%. That 10-year close ties Oct. 29 and is the highest since Oct. 28, when it was 5.05%, and the 2-year is the highest since Oct. 21, per the Treasury's daily curve. Treasury sold $42 billion of 10-year notes at a 5.020% high yield on the day, which we examined in our auction story. Intraday figures reported by CNBC were a touch higher than Treasury's end-of-day par yield.

Winners and losers

Nvidia was the day's biggest large-cap drag, down 5.5% to $168.89 per Yahoo Finance. It was lower after President Trump said he believed CEO Jensen Huang had no idea a woman he had an affair with was an alleged Chinese spy; our Nvidia update explains what is and is not established, and the cause of the drop is not. Microsoft fell 2.2% to $533.16. Apple slipped 0.6% to $348.51.

Not everything fell. Broadcom rose 3.9% to $331.98 and AMD gained 1.3% to $515.21, so the Philadelphia Semiconductor index lost only 0.35% to 9,998.33 despite Nvidia. Micron was down 1.1% and Tesla up 0.5%. Exxon (-0.2% to $164.47) and JPMorgan (flat at $342.07) barely moved.

Gold and oil

Precious metals took the rate shock directly. Gold futures fell 1.86% to $4,037.90 and silver futures 2.1% to $51.47, a move Kitco linked to the hot core CPI and a December hike being priced, as in our gold story. Oil barely moved after Monday's 4.4% slide: WTI ended at $86.48, as discussed in our oil report.

Who it hits

Anyone with debt that floats. A restaurant with $60,000 drawn on a line at prime plus 3 pays about $500 a month in interest at 10%; each quarter point adds about $12.50 a month. A contractor with $250,000 drawn at prime plus 1 adds roughly $52 a month per quarter point (8% to 8.25%, about $1,667 to $1,719). Those are illustrations, not quotes, and nothing is set until the Fed votes. Fixed-rate borrowers do not feel a hike on their existing debt, but a business pricing a new long loan off the 10-year now starts about 10 basis points higher than it did on Monday.

What to watch

Producer prices are due Friday, with CPI the main input to the December call. Nvidia reports on Nov. 17, and the Dec. 4 jobs report comes before the Fed meets. The S&P 500 is still 3.8% below its Oct. 6 peak on our chart.

Sources: Yahoo Finance; U.S. Treasury; CNBC; CME FedWatch via CNBC; Bureau of Labor Statistics via CNBC and Fox Business; TreasuryDirect; Kitco. Some data may be delayed. This is market information, not investment advice.