Stocks Fall on Inflation Woes as Chip Rout Deepens: Markets Wrap

(Bloomberg) — A renewed selloff in chipmakers dragged down stocks, extending a drop that had been fueled by bets the Federal Reserve will keep boosting interest rates to fight inflation.

The fastest increase in consumer prices since April reinforced expectations for rate hikes even if the Fed pauses in October. Those wagers curbed the appetite for riskier assets. A rout in chip giants deepened on worries about the artificial-intelligence trade. The Nasdaq 100 fell 1.5%. AI cloud-computing provider CoreWeave Inc.’s bonds hit levels that typically indicate distress.

Short-dated Treasuries led losses. Money markets see an about 40% chance the Fed will boost rates in October. Two 25-basis-point hikes were briefly fully priced in by the end of January. The dollar rose to the highest since May 2025.

The consumer price index rose 0.6% in September from a month earlier, driven by a surge in fuel costs. A key measure of underlying price pressures, which excludes food and energy, was up 0.3%.

“It’s clear as ever that inflation is stubborn and moving in the wrong direction,” said Skyler Weinand at Regan Capital. “While we expect the Fed to pause on any rate changes in October, we expect rate hikes to resume in December.”

Wednesday’s report, which also showed the CPI advanced 3.7% from a year earlier and core CPI rose 2.6%, came ahead of the central bank’s Oct. 27-28 policy meeting. Fed Chair Kevin Warsh is due to speak late Thursday New York time from the International Monetary Fund meetings in Bangkok.

Inflation pressures are broadening beyond energy, suggesting the last mile back to target could remain bumpy and keep rates elevated, according to Jeff Roach at LPL Financial. The latest report complicates the Fed’s decision this month as the road back to price stability is looking increasingly difficult to navigate, he added.

The question is whether firmer core inflation is enough to alter the Fed’s path, according to Seema Shah at Principal Asset Management. Markets are clearly unsettled, but the latest report is not strong enough to revive the case for an October hike, she said.

While the latest CPI print raises concerns around inflation risks, the Fed has already communicated a gradual hiking process, according to TD Securities’ strategists including Oscar Munoz and Gennadiy Goldberg.

“Today’s report makes the chance of an October hike higher, but we still believe the Fed will hold and opt for December as the market is already doing some of the work for them,” they said.

Corporate Highlights:

Anthropic PBC was said to meet prospective investors on Wednesday in preparation for its initial public offering. OpenAI has named former xAI executive Uday Ruddarraju to lead its infrastructure and compute businesses, marking the latest leadership shakeup for its teams focused on expanding data center capacity. Hewlett Packard Enterprise Co., Dell Technologies Inc. and NetApp Inc. were downgraded to equal-weight at Barclays, which cited the recent “significant” stock run and a more cautious approach on the stocks given the enterprise spending environment. Bank of America Corp.’s stock and fixed-income traders missed estimates as the bank’s results were also hurt by a charge tied to regulatory penalties over money laundering and sanctions violations. Morgan Stanley’s third-quarter profit climbed as the firm’s equity traders trounced analysts’ estimates and the wealth-management operation brought in a record amount of money. BlackRock Inc. pulled in $205 billion of new money in the third quarter as revenue surged at the world’s largest asset manager, which is now a full year into a major transformation to push further into higher-fee private markets. What Bloomberg strategists say…

“The higher-yield bogeyman has returned to haunt stocks after Wednesday morning’s inflation print, prompting traders to hide in value stocks and lower-beta sectors, which are less sensitive to index gyrations.”

—Tatiana Darie, Macro Strategist, Markets Live. For the full analysis, click here.

Some of the main moves in markets:

Stocks

The S&P 500 fell 1% as of 1 p.m. New York time The Nasdaq 100 fell 1.5% The Dow Jones Industrial Average fell 0.3% The MSCI World Index fell 0.9% Currencies

The Bloomberg Dollar Spot Index rose 0.4% The euro fell 0.7% to $1.1123 The British pound fell 0.8% to $1.3155 The Japanese yen fell 0.3% to 158.76 per dollar Cryptocurrencies

Bitcoin fell 1.7% to $81,937.65 Ether fell 2.4% to $2,447.9 Bonds

The yield on 10-year Treasuries advanced two basis points to 5.23% Germany’s 10-year yield was little changed at 3.47% Britain’s 10-year yield declined two basis points to 5.42% Commodities

West Texas Intermediate crude rose 1.8% to $95.85 a barrel Spot gold fell 1.9% to $4,082.85 an ounce ©2026 Bloomberg L.P.