Stock Market Today: Dow Opens Lower After Inflation Report

The Labor Department reported Tuesday that the Consumer Price Index increased 0.4% month-over-month in October, hotter than the 0.3% economists polled by FactSet had expected. The department did not publish a year-over-year rate because the 2025 government shutdown left it without October 2025 data for comparison. Headline inflation cooled from September's 0.6% monthly gain, but core CPI, which excludes food and energy, rose 0.3% for the third straight month, slightly above forecasts. Shelter costs climbed 0.3% and accounted for more than 30% of the all-items increase, while food prices accelerated 0.5% after being flat in September. Energy prices rose 0.7%, down from 5.2% in September, as gasoline prices fell below $4 a gallon nationally for the first time in nearly four months, according to AAA. CBS News reported that the Iran war had driven energy costs higher in recent months, but global oil prices have dipped on hopes the midterm elections could open the door to a U.S.-Iran deal to end the conflict. Vanguard senior economist Josh Hirt said elevated energy prices have created a "longer-lasting shock pass-through" to core inflation, leading the firm to raise its year-end 2026 core inflation forecast to 3.2%. Edward Jones senior economist James McCann called the report "the last look at CPI inflation the Fed will get before its December meeting" and said it "most likely seals the deal on a rate hike to close the year." CME Group's FedWatch tool showed an 85% chance of a 0.25-percentage-point increase and a 15% chance of a 0.50-point hike at the Dec. 8-9 meeting. Fed Governor Christopher Waller, speaking at a London conference Tuesday, argued policymakers should consider a half-point move: "Hiking only 25 basis points would put our credibility at risk, a risk I am not eager to take." The central bank held rates steady at its October meeting, though two FOMC members voted for a hike.