Financeupdated 1h ago2 min read
US Stocks Slide After Inflation Accelerates to 3.7%, Nasdaq Drops 1.9%
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US CPI at 3.7% year-over-year, hotter than expected, boosting bets on Fed rate hikes. Nasdaq falls as AI shares lead declines amid inflation surprise.
11 outlets told this the same way.
Hot CPI hits stocks
US stocks slid to their worst day since July after inflation accelerated to 3.7 per cent, with the S&P 500 sinking 1.1 per cent for a fifth loss in the six days since setting its all-time high. The Nasdaq composite slid 1.9 per cent as stocks in the artificial-intelligence industry led the way lower, while the Dow Jones Industrial Average fell 48 points, or 0.1 per cent. The S&P 500 lost 83.96 points, or 1.08%, to end at 7,721.49 points, while the Nasdaq Composite lost 502.90 points, or 1.85%, to end at 26,701.48.
The S&P 500 declined 1.11% to end the session at 7,718.94 points, and the Nasdaq declined 1.88% to 26,692.87 points. Interest-rate traders were pricing in a 37% chance that Fed policymakers will raise rates this month, according to CME's FedWatch tool.
Fed hike odds jump
AFP said the consumer price index was up more than analysts expected in September, rising 3.7 percent on a year-on-year basis, a marked increase from August's 3.4 percent reading. eToro analyst Bret Kenwell said, "Today's CPI report came in hot, with annual headline inflation reaching its highest level since May," and he said the knee-jerk reaction may be for traders to reassess the odds of a Fed rate hike later this month. Operators raised the probability that the Fed will raise interest rates at the next meeting to 40%, and the probability of a rate hike had risen from 22% on Tuesday to 47% according to CME's FedWatch tool.
Fed Vice Chair for Supervision Michelle Bowman told markets and the economy had time to evolve after its September rate rise before deciding further action. 24/7 Wall St said the report pushed Treasury yields up and put another Federal Reserve rate hike back in play for this month, after consumer prices rose 3.7% from a year earlier.
AI selloff and debt
CNN said high-flying technology stocks took a bruising as the hotter-than-expected inflation report bolstered bets that the Federal Reserve will raise interest rates further, with the S&P 500 falling 1.11% and the Nasdaq Composite falling 1.88%. Marvell fell 8.7%, Oracle sank 8.8%, and Dell dropped 11.3%, while a benchmark index tracking semiconductor stocks fell 4.3%. CoreWeave plunged 15.5% on Wednesday after commentators raised concerns about a surge in the company's bond yields, and it said the company has tens of billions of dollars of debt on its balance sheet.
CoreWeave (CRWV, -15.46% at $65.78) was under pressure because it took on a lot of debt to fund its costly data centers, and it said the company must more than $35 billion. Bank of America fell, and the lender's profit fell in the third quarter as it set aside $1.2 billion to cover regulatory fines for failures to detect potential money laundering.