Wall Street stocks fell sharply Wednesday after stronger-than-expected inflation data raised concerns about additional Federal Reserve interest rate hikes, triggering heavy losses in artificial intelligence companies, semiconductor stocks and major banks.
By yourNEWS Media Newsroom
U.S. stocks closed sharply lower Wednesday, October 14, as accelerating inflation fueled expectations of additional Federal Reserve interest rate increases, sending technology shares tumbling and placing renewed pressure on companies heavily invested in artificial intelligence infrastructure.
The Nasdaq Composite fell approximately 1.9%, while the S&P 500 declined 1.1%, marking its largest single-day percentage loss since July 29. The Dow Jones Industrial Average slipped 0.1%, according to Reuters’ market report.
Preliminary closing figures put the Nasdaq at 26,701.48, down 502.90 points, while the S&P 500 fell 83.96 points to 7,721.49. The Dow lost 45.23 points to finish at 51,624.87.
The selloff followed a Labor Department report showing consumer prices increased 0.6% in September, bringing annual inflation to 3.7%, up from 3.4% in August.
Gasoline prices surged 9.1% during the month, accounting for more than half the overall increase. Core inflation, which excludes volatile food and energy prices, rose 0.3% for the month and 2.6% annually, exceeding economists’ expectations.
The unexpectedly strong core reading intensified concerns that inflationary pressures remain widespread and could force the Federal Reserve to continue raising borrowing costs.
Traders increased their expectations of an interest rate hike at the Fed’s October meeting, with CME Group’s FedWatch tool indicating a 37% probability, compared with 22% Tuesday.
“Investors are not happy with the report because that puts pressure on the Fed to raise rates to combat inflation,” said Adam Sarhan, chief executive of 50 Park Investments in New York.
“Inflation remains public enemy number one for the market and for the Fed.”
Artificial intelligence companies suffered some of Wednesday’s steepest losses as investors reassessed the costs of financing expensive data centers, computing infrastructure and related expansion projects.
Oracle declined approximately 9%, while cloud infrastructure provider CoreWeave plunged 16% and AI infrastructure company Nebius dropped 11%.
The declines erased roughly $80 billion in combined market value among several leading AI companies, according to Reuters’ analysis of the technology selloff.
Dell Technologies also fell about 11%, while Hewlett Packard Enterprise declined after Barclays downgraded both AI server manufacturers from “overweight” to “equal-weight.”
The Philadelphia Semiconductor Index extended its losing streak to six consecutive sessions, its longest such decline since May 2025.
Technology stocks have accounted for a substantial portion of the broader market’s gains this year, leaving major indexes particularly sensitive to shifts in investor expectations.
Despite Wednesday’s losses, the S&P 500 remained more than 12% higher for 2026 following last week’s record highs. However, the median stock in the index had gained only about 4%, while more than 200 components were trading below their year-end 2025 levels.
The uneven performance has raised concerns about the market’s reliance on a relatively small group of large technology companies.
Banking stocks also came under pressure following quarterly earnings reports and regulatory developments.
Bank of America shares declined after the lender reported lower third-quarter profits and set aside approximately $1.2 billion to cover federal penalties related to anti-money laundering compliance failures.
Morgan Stanley also fell despite reporting higher quarterly earnings, while the S&P 500 Banks Index dropped to its lowest level in more than four months.
Federal Reserve Vice Chair for Supervision Michelle Bowman said before the inflation report that policymakers could afford to observe economic conditions following September’s interest rate increase before deciding whether additional action was necessary.
Wednesday’s inflation figures complicated that outlook by showing that price pressures remain elevated across several sectors of the economy.
One notable exception to the market’s decline was Bending Spoons, whose shares surged after Berkshire Hathaway announced an additional $330 million investment in the technology company, which owns Vimeo and AOL.
The broader selloff nevertheless reflected increasing investor concern about the combination of persistent inflation, rising Treasury yields and the financing demands of rapidly expanding artificial intelligence businesses.
With inflation remaining well above the Federal Reserve’s 2% target, investors are now focused on whether policymakers will raise interest rates again at their upcoming meeting and how higher borrowing costs could affect corporate earnings and economic growth.
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