• Nasdaq Composite deepens losses to around 2% intraday as September CPI surprises at 3.7% and Treasury yields hit multi-decade highs.
  • AI infrastructure darlings Oracle (ORCL), CoreWeave (CRWV), and Nebius (NBIS) lead the rout, while semiconductor stocks notch their longest losing streak since May 2025.
  • Bank earnings disappoint, but defensive sectors and BlackRock (BLK)’s strong results offer a partial offset.

A Broad Retreat

The Nasdaq Composite’s decline accelerated to roughly 2% by early afternoon, extending a selloff that has been building for days. The tech-heavy index was last down about 2% intraday, according to a subsequent snapshot, after a 12:30 p.m. EDT reading showed a 1.66% drop to 26,751.71. The move underscores mounting anxiety over persistent inflation, rising bond yields, and a sharp reassessment of artificial-intelligence-related stocks.

At the heart of the selloff is a hotter-than-expected September consumer price report. CPI rose 3.7% year over year, up from 3.4% in August and above the 3.6% consensus forecast. Fuel prices were a key contributor, with Brent crude trading around $105.76 a barrel amid the ongoing war with Iran. The 10-year Treasury yield jumped to about 5.23% after briefly exceeding 5.32%, heaping pressure on equity valuations and borrowing costs—especially for capital-intensive AI infrastructure firms.

AI Darlings Crushed

Oracle fell 7.8%, while CoreWeave and Nebius each tumbled more than 11%. Dell (DELL) and HP (HPQ) dropped 11.5% and 7.8%, respectively, after Barclays (BCS) downgraded both to “equal-weight” from “overweight.” Semiconductor stocks headed for their sixth consecutive losing session—the sector index’s longest streak since May 2025.

The pain was not confined to tech. Bank of America (BAC) slid 5.3% and Morgan Stanley (MS) lost 3.5% after disappointing quarterly results, though Morgan Stanley still reported higher profit. Bank of America’s numbers included a $1.2 billion charge for regulatory fines tied to alleged anti-money-laundering and sanctions violations. The S&P 500 Banks index touched its lowest level in more than four months.

Yet there were pockets of strength. Consumer staples and healthcare rose 1.7% and 2.1%, respectively, helping limit the Dow Jones Industrial Average’s decline to 0.30% at 51,516.03. BlackRock bucked the trend, posting stronger-than-expected profit and revenue with $205 billion in quarterly net inflows and $15.5 trillion in assets under management; its shares edged higher.

Fed Watch Intensifies

The inflation data forced a hawkish repricing of rate expectations. Reuters (TRI)’ midday report put the probability of a quarter-point hike at 60%, up from 21.6% before the CPI release, according to LSEG (LSEG.L) data. An earlier AP report cited a 39% probability based on CME (CME) data; the differing timestamps and methodologies explain the gap. Either way, the trend is clear: traders are betting the Federal Reserve may need to tighten further.

Fed Vice Chair for Supervision Michelle Bowman said policymakers have time to assess conditions after September’s increase before taking further action, leaving the door open. New York Fed President John Williams said on October 13 that another hike might be needed by year-end but saw no reason to expect one in 2027. Principal Asset Management (PFG)’s Seema Shah, however, forecasts additional hikes in December and early 2027, arguing that firmer inflation and economic resilience mean the Fed’s work is unfinished.

What Lies Ahead

In the short term, Treasury yields and upcoming earnings will dictate the market’s direction. Strong profits could cushion valuations; disappointments would leave stocks more exposed to higher rates. Investors will also parse the Fed’s Beige Book, due later today, for clues on regional economic conditions.

The Nasdaq’s decline is not occurring in isolation. It follows a 0.15% drop on October 13, with chipmakers already under pressure as investors questioned whether massive AI capital expenditures would generate sufficient returns. The S&P 500 was heading for its fifth loss in six sessions after hitting a record high. Overseas, European indexes were generally higher following a weaker Asian session.

Meanwhile, households face the double squeeze of inflation and rising borrowing costs. Mortgage rates are at their highest level in nearly three years, deterring potential homebuyers; shares of Lennar (LEN), PulteGroup (PHM), and D.R. Horton (DHI) each fell roughly 3%. Nasdaq decliners outnumbered advancers by 3.78 to one, a sign of broad weakness beneath the headline index move.

Efforts to reach the Fed for comment were unsuccessful. An earlier version of this article misstated the percentage decline in the Nasdaq at a specific timestamp; the current figure reflects the latest available intraday snapshot.