U.S. benchmark indexes fell Wednesday as hotter-than-expected inflation data and a sharp drop in semiconductor stocks weighed on sentiment. The Nasdaq Composite recorded its worst single-day performance since July.
U.S. stock markets declined on Wednesday, with benchmark indexes closing lower as investors reacted to inflation data that exceeded expectations. The September Consumer Price Index (CPI) rose 0.6% month-over-month, with the annual rate reaching 3.7%, driven largely by soaring energy prices. According to reporting from Reuters, this "red-hot" CPI report fueled concerns that the Federal Reserve may need to consider rate hikes rather than cuts, pressuring equity valuations.
The tech-heavy Nasdaq Composite led the losses, shedding more than 500 points to close nearly 2% lower. This marked the index's worst single-day performance since July 23. The S&P 500 declined 1.11%, while the Dow Jones Industrial Average fell 0.09%. The decline was exacerbated by a sharp selloff in the semiconductor sector, as weakness in South Korean tech stocks dragged down U.S. counterparts, including major players in the artificial intelligence supply chain.
Market sentiment remained cautious as investors weighed the implications of persistent inflation on future monetary policy. The drop in chip stocks highlighted the continued volatility in the AI-driven market segment, with investors reassessing growth expectations in light of the macroeconomic data. As of late Wednesday, U.S. stock futures indicated continued downward pressure, with the Nasdaq-100 futures declining more than 1%.