Stocks Drop and Yields Climb as Strong Economic Data Boosts Case for More Fed Rate Hikes

Treasury yields climbed and stocks struggled after economic reports showed resilient consumer spending, reinforcing the case for the Fed to keep interest rates higher.

Retail sales and industrial production exceeded forecasts in September, prompting economists to boost GDP estimates. Traders priced in higher odds of a Fed rate hike in January.

Hot inflation data caused two-year Treasury yields to hit their highest since 2006. The S&P 500 erased gains, led lower by tech stocks like Nvidia and Goldman Sachs.

Bank of America and Dollar Tree rose on upbeat earnings news. United Airlines projected lower Q4 profit on suspended Tel Aviv flights.

Geopolitical tensions remained high as Biden traveled to Israel and the Israeli military struck Gaza. The Bank of Israel urged steadying the shekel after an eight-year low.