The S&P 500 is on track for its first back-to-back daily loss in 2026, declining 0.8% on Tuesday, following a hotter-than-expected Producer Price Index report that reignited inflation fears. The Nasdaq Composite dropped 1.1%, while the Dow Jones Industrial Average fell 0.5%.
- S&P 500 declined 0.8% to 5,123.45, marking first back-to-back daily loss in 2026
- December PPI rose 0.5% MoM, exceeding forecast of 0.3%
- 10-year Treasury yield climbed to 4.67%, up 11 bps from previous close
- Market-implied chance of a June rate cut fell from 42% to 58% post-PPI
- Nasdaq Composite dropped 1.1% to 17,890.21, with tech stocks under pressure
- VIX surged to 17.4, indicating heightened market volatility
The S&P 500 entered a correction phase early Tuesday, marking its first consecutive daily decline of the year after a sharp reversal in equity markets. The index closed down 0.8% at 5,123.45, reversing gains from Monday’s session. The Nasdaq Composite dropped 1.1% to 17,890.21, led by technology stocks, while the Dow Jones Industrial Average slipped 0.5% to 38,421.33. The sell-off followed the release of the December Producer Price Index, which showed a 0.5% month-over-month increase, surpassing expectations of a 0.3% rise and signaling persistent inflationary pressures in the manufacturing and wholesale sectors. The PPI data fueled renewed speculation that the Federal Reserve may extend its current interest rate hold into the second quarter of 2026. Market-implied probabilities for a rate cut in June jumped from 42% to 58% post-data, reflecting growing uncertainty. Treasury yields reacted sharply, with the 10-year yield rising 11 basis points to 4.67%, the highest level since late October 2025. Bond markets are now pricing in a 65% chance of no rate cuts through the end of the year. Technology and energy sectors were among the hardest hit, with Apple (-1.7%), Microsoft (-1.3%), and ExxonMobil (-1.0%) leading the decline. The broader market’s reaction underscored investor sensitivity to inflation data, particularly in a rate-sensitive environment. The CBOE Volatility Index (VIX) spiked to 17.4, its highest level since mid-December, signaling increased risk aversion. The downturn affected not only equities but also broader financial markets. The U.S. dollar index rose 0.6% to 105.3, while gold prices fell 1.2% to $2,038 per ounce. Market participants are now closely watching the upcoming January 2026 jobs report, due Friday, for further clues on inflation trends and labor market strength.