Wall St tumbles as hot CPI boosts rate-hike bets; banks, AI stocks weigh
SPY•The S&P 500 fell 1.10% and the Nasdaq dropped 1.66% as September inflation exceeded expectations, lifting traders’ chance of a quarter-point rate increase to 60% from 21.6%. Bank of America and AI-related stocks declined.
1. Indexes fall
The S&P 500 and Nasdaq fell on Wednesday as hotter-than-expected September consumer prices and bank earnings weighed on stocks. At 12:30 p.m. ET, the Dow was down 0.30%, the S&P 500 1.10% and the Nasdaq 1.66%.
2. Rate bets rise
Surging gasoline prices contributed to inflation rising more than expected. Traders saw a 60% chance of a quarter-point rate increase, compared with 21.6% before the data. Seema Shah of Principal Asset Management said firmer core inflation and economic resilience suggested the Fed’s job was not yet done; she said the firm expected further hikes in December and early 2027.
3. Banks and AI stocks slide
Bank of America fell 5.3% after third-quarter profit declined and it set aside $1.2 billion to cover regulatory fines. Morgan Stanley slipped 3.5% despite higher quarterly profit. Oracle lost 7.8%, while CoreWeave and Nebius fell more than 11% each; Dell and HP fell after Barclays downgraded the stocks. The Philadelphia semiconductor index was set for its sixth consecutive session of declines.
