Tech melt: US stocks fall as inflation revives rate-hike concerns and AI financing worries deepen
SPY•US stocks fell sharply after stronger-than-expected inflation data revived the possibility of a Federal Reserve rate hike this month, while concerns about AI financing pressured technology shares and bonds. The Nasdaq dropped 1.9%, the S&P 500 fell 1.1%, and the dollar reached an 18-month high.
1. Stocks and bonds slide
The Nasdaq posted its biggest decline in three months on Wednesday, falling 1.9%, while the S&P 500 lost 1.1%. Technology shares fell 2.6%, the chip index dropped 4.2% for a sixth consecutive session, and AI-related corporate bonds declined as yields and spreads rose.
2. AI borrowing concerns
Investor sentiment toward AI financing, including circular financing, weakened. CoreWeave's 9.75% bond due in 2031 yielded 16% and hit a record low price; Meta's bond due in 2049 and the CoreWeave bond were each down about 20% from issuance. Oracle's 4.9% bond due in 2033 also reached a record low.
3. Trade and government stakes
The article said stronger earnings and positive executive outlooks could help stabilize AI-related bonds and stocks, while raising the possibility of government intervention if selling persists. It also cited the US government's equity stakes in Intel and other companies, and said China's September exports widened its trade surplus more than expected, putting it on track for another annual surplus of $1 trillion.
