(Bloomberg) — US stocks declined after strong retail sales and at least two Federal Reserve speakers recast bets that the central bank’s policy tightening regime is nearing an end.

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The S&P 500 and the Nasdaq 100 fell after a report showed retail sales posted the biggest increase in eight months in October, outpacing estimates and indicating the economy can withstand additional Fed rate hikes.

A closely watched part of the US yield curve is now the most inverted it has been since 1982, signaling concerns that restrictive policy will sap the economy.

The market pullback comes after a hefty rally fueled by softer-than-expected US inflation data that fanned expectations the Fed may be able to slow its tempo of interest-rate hikes. That alongside news of China’s post-Covid reopening had pushed the dollar and Treasury yields lower in recent days.

But on Wednesday, New York Fed President John Williams bruised sentiment after he said the central bank should avoid incorporating financial stability risks into its considerations as it raises interest rates. San Francisco Fed President Mary Daly, meanwhile, emphasized that a pause is “off the table.” JPMorgan Chase & Co. economists are projecting the US will enter a “mild” recession next year thanks to the Fed’s hikes.

“The Fed’s job is not being made any easier by all of this different data,” Oksana Aronov, alternative fixed income head of markets strategy at JPMorgan Asset Management, said on Bloomberg TV. “The stronger retail numbers today give them more cover to be aggressive, which is what they have consistently telegraphed.”

In corporate news, Target Corp.’s shares plunged after it warned that US shoppers are pulling back. Micron Technology Inc. shares also tumbled after it said the market outlook for 2023 has weakened.

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Earlier, comments from US President Joe Biden that Ukrainian air defenses, rather than by Russia, had likely caused Tuesday’s explosion in Poland soothed fears of an escalation in military conflict.

Key events this week:

• Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday

• ECB President Christine Lagarde speaks, Wednesday

• Eurozone CPI, Thursday

• US housing starts, initial jobless claims, Thursday

• Fed’s Neel Kashkari, Loretta Mester speak, Thursday

• US Conference Board leading index, existing home sales, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.6% as of 10:51 a.m. New York time

• The Nasdaq 100 fell 1.4%

• The Dow Jones Industrial Average was little changed

• The Stoxx Europe 600 fell 0.9%

• The MSCI World index rose 1.1%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro rose 0.4% to $1.0394

• The British pound rose 0.1% to $1.1878

• The Japanese yen was little changed at 139.34 per dollar

Cryptocurrencies

• Bitcoin fell 2.7% to $16,434.17

• Ether fell 4.2% to $1,192.91

Bonds

• The yield on 10-year Treasuries declined three basis points to 3.74%

• Germany’s 10-year yield declined 10 basis points to 2.01%

• Britain’s 10-year yield declined 14 basis points to 3.15%

Commodities

• West Texas Intermediate crude fell 1.9% to $85.23 a barrel

• Gold futures rose 0.3% to $1,781.80 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sujata Rao, Augusta Saraiva, Isabelle Lee, Vildana Hajric, Emily Graffeo and Peyton Forte.

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