Nasdaq ends sharply lower as hot inflation data stirs rate-hike worries
SPY•The Nasdaq fell 1.88% and the S&P 500 dropped 1.11% after September inflation rose more than expected, increasing rate-hike concerns. Traders priced in a 37% chance of a Fed rate increase this month, up from 22% on Tuesday.
1. Stocks fall on inflation worries
US stocks fell on Wednesday after hotter-than-expected September inflation data increased bets that the Federal Reserve may need to raise interest rates further. The Nasdaq dropped 1.88% to 26,692.87, its biggest daily decline since July 23, while the S&P 500 fell 1.11% to 7,718.94, its biggest one-day drop since July 29. The Dow declined 0.09% to 51,621.48.
2. AI and chip stocks slide
Oracle lost 8.8%, while CoreWeave fell 15% and Nebius dropped 10%. The Philadelphia SE Semiconductor Index declined 4.3%, its sixth consecutive losing session. Dell and Hewlett Packard Enterprise fell 11.4% and 8.2%, respectively, after Barclays downgraded both AI server makers to equal-weight from overweight.
3. Rate bets and bank results
Interest-rate traders priced in a 37% chance of a Fed rate increase this month, up from 22% on Tuesday. Bank of America fell 4.8% after its third-quarter profit declined as it set aside $1.2 billion for potential regulatory fines related to failures to detect potential money laundering. Morgan Stanley dropped almost 3% despite higher quarterly profit.
