Stocks Fall on Inflation Woes as Chip Rout Deepens: Markets Wrap
(Bloomberg) — A renewed selloff in chipmakers dragged down stocks, extending a decline 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 gauge chip giants lost 4.5%. The Nasdaq 100 fell 2.2%. CoreWeave Inc.’s bonds hit levels that typically indicate distress, and the AI cloud firm’s chief said the market is acting “irrationally.”
A closely watched measure of semiconductor powerhouses such as Nvidia Corp. and Broadcom Inc. has tumbled about 20% from a June peak amid mounting concerns about higher rates, lofty valuations and the massive cost of building artificial-intelligence infrastructure.
“While increased competition within AI, rising financing requirements, and higher rates may periodically add to volatility, we view this latest bout as more of a recalibration of expectations than a fundamental break in the AI investment story,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
Those jitters resurfaced at a time when Wall Street is already grappling with uncertainties around the outlook for monetary policy. The broad upswing in consumer prices prompted traders to briefly price in two Fed hikes by the end of January. Short-dated Treasuries underperformed. The dollar rose to the highest since May 2025.
“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.”
Read: Fed Beige Book Shows Intensifying Price Growth in Some Areas
Fed Chairman Kevin Warsh has vowed not to steer markets with his own near-term outlook for monetary policy. But the inflation surprise will heighten scrutiny of his remarks late Thursday New York time in Bangkok, where he is scheduled to appear in a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva.
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 consumer price index 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:
Nvidia Corp. Chief Executive Officer Jensen Huang said he would halt the supply of chips to a customer that was developing unsafe AI software, though he doesn’t believe that the current level of concern about the technology is warranted. The judge in Apple Inc.’s high-stakes trade-secret theft case against OpenAI said he’s “highly likely” to grant the iPhone maker an injunction barring use of its proprietary information by former employees now at the artificial intelligence startup. 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 1.3% as of 3:18 p.m. New York time The Nasdaq 100 fell 2.2% The Dow Jones Industrial Average fell 0.3% The MSCI World Index fell 1% Currencies
The Bloomberg Dollar Spot Index rose 0.3% The euro fell 0.4% to $1.1155 The British pound fell 0.5% to $1.3189 The Japanese yen was little changed at 158.19 per dollar Cryptocurrencies
Bitcoin fell 1.9% to $81,729.18 Ether fell 3.2% to $2,428.17 Bonds
The yield on 10-year Treasuries declined two basis points to 5.19% 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% to $95.07 a barrel Spot gold fell 1.4% to $4,101.67 an ounce ©2026 Bloomberg L.P.
