The S&P 500 dropped 0.8% and the Nasdaq lost 1.2% after September CPI came in hotter than expected, while the Dow hovered around flat.
U.S. consumer prices rose 3.7% year over year versus 3.6% expected; core CPI hit 2.6% against 2.5%, with gas and energy driving the upside surprise.
Treasury yields climbed as investors reassessed the Fed outlook, even though CME FedWatch still showed about 78% expecting rates to stay unchanged at the next meeting.
Bank of America shares slid as much as 9% after a 17% profit drop and a $1.2 billion regulatory penalty, while BlackRock rose on an earnings beat.
Brent crude held above $105 a barrel amid Houthi attacks on Saudi energy facilities, adding to inflation pressure as markets await Taiwan Semiconductor results for fresh AI-demand signals.