TL;DR
Get smart everyday buys delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
The Nasdaq Composite fell 1.9% after a hotter-than-forecast September consumer price report sent Treasury yields sharply higher early in the session. AI-linked shares and chipmakers were among the decliners, while investors awaited producer-price and retail-sales data for further clues on inflation and Federal Reserve policy.
U.S. stocks fell at Wednesday’s close after the government reported that consumer prices rose faster than Wall Street forecast in September, renewing concerns about inflation and interest rates. Read more in the latest stock market news. The Nasdaq Composite dropped 1.9% to 26,692, with technology and AI-linked shares under pressure as investors reassessed the outlook for Federal Reserve policy.
The S&P 500 lost 1.1% to 7,719, while the Dow Jones Industrial Average slipped 0.09% to 51,622. The pullback followed a sharp initial reaction in the bond market: the two-year Treasury yield briefly rose more than 10 basis points after the inflation report, before easing during the session. See also how rate pressure affected the Dow. It ended up 1.5 basis points at 4.808%, according to the report.
Trading was not uniformly weak. Healthcare, consumer staples and energy stocks attracted buying, while technology and other companies associated with AI investment fell. Nvidia declined 3.2%, and industrial company Caterpillar, which is also exposed to AI-related demand, fell 3.1%. The Nasdaq’s decline extended a seven-session losing streak for chipmakers, the report said.
ASML, the Netherlands-based semiconductor equipment maker, fell 3.9% despite reporting third-quarter revenue growth of 47% and earnings growth of 127%. The company narrowly missed revenue expectations but beat earnings forecasts and raised its fourth-quarter sales guidance. Management also said it would have difficulty meeting demand for its chips in 2027 and 2028, pointing to a substantial order backlog. The mixed market reaction showed that strong company results did not outweigh concern about inflation and uncertainty around the industry outlook.
Inflation Reopens Rate-Hike Concerns
The selloff matters because higher inflation can limit the Federal Reserve’s ability to cut rates and may prompt investors to price in the possibility of further tightening. The report said CME FedWatch showed a 34.9% probability of a 25-basis-point rate hike at the Fed’s October 27–28 meeting, up from 22.1% on Tuesday. That reading reflects market pricing, not a decision or forecast from the central bank.
Changes in rate expectations can affect borrowing costs, bond prices and the valuations investors assign to companies. Technology and AI-related shares were particularly exposed in Wednesday’s trading, while more defensive sectors drew buyers. The session also illustrated that demand for AI infrastructure does not insulate chipmakers or related industrial companies from broader economic and monetary-policy concerns.
Bond-market moves were mixed by the close. The two-year yield was higher, while the 10-year yield fell 2.7 basis points to 5.19% and the 30-year yield fell 4.6 basis points to 5.517%. Those figures describe the end of a volatile session; they do not establish a lasting change in the rate outlook.
As an affiliate, we earn on qualifying purchases.
AI Demand Meets Inflation Risk
The market reaction joined two forces investors were weighing: demand tied to AI investment and renewed concern that price pressures may be persistent. ASML’s guidance pointed to continuing demand for semiconductor equipment, but the company also faces questions about its ability to ship deep-ultraviolet lithography tools to China. Ahead of the results, Bank of America Securities analyst Didier Scemama described those export questions as a hot topic among investors and said he thought the issue was largely reflected in the stock. He maintained a Buy rating and a $2,915 12-month target for ASML’s American depositary receipt; the shares closed at $1,650 on Wednesday.
Barclays economist Pooja Sriram said the inflation report was unlikely to reassure policymakers. She pointed to energy costs feeding into core prices, resilient consumer spending and AI-related price pressures as risks that economists had been flagging. Sriram also cautioned that favorable base effects could mechanically lower annual inflation rates next year without resolving questions about underlying inflation. These are her assessments, not confirmed explanations for the market’s full-day moves.
Separately, Bank of America shares fell 4.7% amid attention to a $1.2 billion Treasury Department fine related to anti-money-laundering violations previously identified in a December 2024 consent order. Jefferies analyst David Chiaverini said the charge reduced earnings by 17 cents per share and maintained a Buy rating, with a $70 12-month target. His assessment of potential upside is an analyst view, not a guaranteed outcome or an official company forecast.
“On balance, this morning’s inflation data are unlikely to provide much comfort to policymakers.”
— Pooja Sriram, Barclays economist, as quoted in the report
stock trading journal for beginners
As an affiliate, we earn on qualifying purchases.
As an affiliate, we earn on qualifying purchases.
Inflation and Rate Outlook Remain Open
The source material does not provide the exact September inflation rate, the forecast it exceeded or the individual components responsible for the surprise. It is therefore not possible from the available details to quantify how much energy, consumer spending or AI-related pricing contributed to the report. Sriram cited those factors as risks, but the material does not establish them as the causes of the monthly result.
It is also unclear whether the early jump in the two-year yield or the increase in the market-implied probability of a rate hike will persist. FedWatch probabilities can change as new data arrive and should not be treated as a Fed commitment. ASML’s comments indicate demand pressure several years ahead, but the report does not quantify the backlog or say how export restrictions could affect shipments. The full effects of Bank of America’s consent order on its operations also remain uncertain, according to the analyst discussion.
As an affiliate, we earn on qualifying purchases.
PPI and Sales Data Due Thursday
Investors were set to receive September Producer Price Index and retail-sales data before Thursday’s opening bell. Those releases could add evidence about inflation further along the production chain and the strength of consumer demand, two issues relevant to the outlook for interest rates. The report did not give the data or specify how markets would respond.
Traders will also continue monitoring Treasury yields, Fed communications and corporate updates for signs of whether Wednesday’s risk-off move extends. The next scheduled policy decision cited in the report is the Fed meeting on October 27–28. Until then, the rate-hike probability remains a market estimate, and the inflation outlook is subject to revision as new evidence arrives.
As an affiliate, we earn on qualifying purchases.
Key Questions
Why did the Nasdaq fall on Wednesday?
The Nasdaq fell 1.9% after September consumer prices rose faster than Wall Street expected. The report said higher rate concerns and losses in technology and AI-related shares contributed to the market’s risk-off tone.
Did all major U.S. stock indexes fall?
Yes. The Nasdaq Composite fell 1.9%, the S&P 500 declined 1.1%, and the Dow Jones Industrial Average slipped 0.09% at the close, according to the report.
What did ASML report?
ASML reported third-quarter revenue growth of 47% and earnings growth of 127%, narrowly missing revenue expectations but beating earnings forecasts. It raised fourth-quarter sales guidance and said meeting demand in 2027 and 2028 would be difficult.
Does the market expect the Fed to raise rates?
CME FedWatch showed a 34.9% probability of a 25-basis-point hike at the October 27–28 meeting, up from 22.1% the previous day. That is a market-implied probability, not a confirmed Fed decision.
What market data were due next?
September producer-price and retail-sales data were scheduled for release before Thursday’s market open. Investors were expected to assess them for additional clues about inflation, consumer demand and the interest-rate outlook.
Source: rss
Halloween Picks
halloween
As an affiliate, we earn on qualifying purchases.
