TLDR
- The Nasdaq fell 1.88% and the S&P 500 dropped 1.11% after September consumer prices rose faster than expected.
- Traders see a 37% chance of a Fed rate hike this month, up from 22% on Tuesday.
- Oracle, CoreWeave, Nebius, Dell and Hewlett Packard Enterprise fell sharply as AI stocks sold off.
- Apple closed above a $5 trillion market value for the first time.
- U.S. futures were lower Thursday, and South Koreaās Kospi fell more than 7%.
U.S. stocks closed sharply lower on Wednesday after a hotter-than-expected inflation report. The data left investors worried that the Federal Reserve may raise interest rates again.
The Nasdaq fell 1.88% to 26,692.87, its biggest daily loss since July 23. The S&P 500 slid 1.11% to 7,718.94, its largest one-day drop since July 29.
The Dow Jones Industrial Average edged down 0.09% to 51,621.48. Eight of the 11 S&P 500 sectors ended lower.
The Labor Department said consumer prices rose faster than expected in September. Gasoline costs jumped, and price increases spread beyond energy.
Traders now see a 37% chance of a Fed rate hike this month, according to CMEās FedWatch tool. That is up from 22% on Tuesday.
Before the report, Fed Vice Chair for Supervision Michelle Bowman said the central bank has time to see how markets and the economy respond to its September rate increase.
āInflation remains public enemy number one for the market and for the Fed,ā said Adam Sarhan, chief executive of 50 Park Investments.
AI and bank stocks lead the declines
Technology and communication services stocks fell the most. Information technology dropped 2.6%, while communication services lost 1.78%.
Oracle fell 8.8%, CoreWeave dropped 15% and Nebius lost 10%. These AI firms are sensitive to higher borrowing costs.
Dell sank 11.4% and Hewlett Packard Enterprise fell 8.2% after Barclays cut both to āequal-weightā from āoverweight.ā The Philadelphia Semiconductor Index lost 4.3%, its sixth straight daily decline.
Bank of America fell 4.8% after its third-quarter profit dropped. The bank set aside $1.2 billion for regulatory fines tied to failures to detect possible money laundering.
Morgan Stanley slipped almost 3% even though its quarterly profit rose. Apple gained 0.5% and closed with a market value above $5 trillion for the first time.
Bending Spoons jumped 41% after Berkshire Hathaway invested another $330 million in the owner of Vimeo and AOL. The S&P 500 is still up almost 13% in 2026, mostly because of AI-related stocks.
Markets on Thursday
U.S. stock futures were lower early Thursday. S&P 500 futures fell between 0.3% and 0.5%, and Nasdaq-100 futures dropped 0.83%.
In Asia, South Koreaās Kospi fell more than 7%, led by SK Hynix and Samsung Electronics. Japanās Nikkei 225 lost 4.4%, and Hong Kongās Hang Seng slid 1%.
Producer prices, retail sales and jobless claims are due at 8:30 a.m. ET Thursday. U.S. Bancorp, PNC and Charles Schwab are also set to report earnings.
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