Nasdaq slides 1.85% as hot CPI revives bets on a Fed rate hike

what happened

Stocks closed lower on Wednesday after consumer price data came in hotter than forecast, reviving fears that the Federal Reserve could tighten policy again. Preliminary figures from Newsmetry API show the Nasdaq Composite shedding 502.90 points, or 1.85%, to 26,701.48. The S&P 500 gave up 83.96 points, or 1.08%, to finish at 7,721.49, while the Dow Jones Industrial Average slipped 45.23 points, or 0.09%, to 51,624.87.

The heaviest selling landed on companies most exposed to borrowing costs. Oracle, CoreWeave and Nebius tumbled, and Dell and Hewlett Packard Enterprise slid after Barclays trimmed its ratings on the AI hardware makers. The Philadelphia semiconductor index logged six consecutive losing sessions, its lengthiest such stretch since May 2025.

The Bureau of Labor Statistics reported that consumer prices accelerated in September, driven by pricier gasoline and price gains that spread beyond energy. Rate futures traders now see a 37% chance that the Fed raises rates at its meeting this month, up from 22% a day earlier, according to CME's FedWatch tool. Adam Sarhan, chief executive of 50 Park Investments in New York, said: "Investors are not happy with the report because that puts pressure on the Fed to raise rates to combat inflation."

Bank of America fell after third-quarter profit declined, as the bank set aside $1.2 billion for regulatory fines linked to lapses in detecting possible money laundering. Morgan Stanley dropped even though its quarterly profit rose. The S&P 500 Banks index hit its lowest level in more than four months. Bending Spoons rallied after Berkshire Hathaway put another $330 million into the owner of Vimeo and AOL.

why it matters

The S&P 500 is still more than 12% higher in 2026 after a record last week, but the median stock is up only 4% and over 200 index members are down this year, so gains have leaned heavily on AI names. Expectations of tighter monetary policy can hit richly valued growth stocks and companies that rely on cheap borrowing the hardest.

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