US equities closed lower on Wednesday after September’s inflation data exceeded expectations, intensifying speculation that the Federal Reserve could implement further interest rate increases. Technology stocks led the decline, with rate-sensitive sectors coming under additional pressure.
Inflation data sparks renewed fears of higher rates
The S&P 500 finished the session down 1.08% at 7,721.49, while the Nasdaq Composite fell 1.85% to 26,701.48. The Dow Jones Industrial Average edged down 0.09%, or 45.23 points, to 51,624.87, as gains in healthcare shares helped limit broader losses.
The US consumer price index (CPI) increased 0.6% month-on-month in September and 3.7% annually, surpassing the consensus estimate of 3.6%. Core CPI, excluding energy and food, rose 0.3% on the month and 2.6% year-over-year, both beating forecasts of 0.2% and 2.5% respectively. Higher gasoline prices contributed more than half of the monthly rise in headline inflation, while price pressures extended beyond the energy sector.
The latest data fueled concerns that the Federal Reserve could keep monetary policy restrictive for an extended period or proceed with another rate hike. CME’s FedWatch tool showed that the probability of a rate increase at the October meeting climbed to 32.7%, up from 22% a day earlier.
Despite the pullback, the S&P 500 remained over 12% higher for 2026 after recently reaching an all-time high, though the median stock in the index saw a gain of only 4% this year, with more than 200 components in negative territory.
Many investors also digested earnings reports from leading US banks, while concerns mounted regarding the effect of rising debt costs and AI infrastructure investment on technology companies.
Technology and AI-linked stocks lead losses
Technology shares, especially those tied to artificial intelligence, came under heavy selling pressure as rising interest rates threatened growth assumptions and access to capital. Oracle dropped approximately 9%, while CoreWeave tumbled over 16%. Nebius also experienced declines as investors reassessed their exposure to AI infrastructure providers vulnerable to rising borrowing costs.
Chipmakers saw notable weakness, with Advanced Micro Devices (AMD) down 5%, and both Intel and SanDisk losing 4%. Micron Technology slid 3% during the session.
The Philadelphia Semiconductor Index posted its sixth straight loss, marking its lengthiest losing streak since May 2025.
Further pressure hit Dell and Hewlett Packard Enterprise after Barclays revised its ratings on the companies, downgrading both from Overweight to Equal Weight. These downgrades reflected increased scrutiny of the heavy financing requirements needed for AI infrastructure growth relative to other technology players.
Mini dictionary: Philadelphia Semiconductor Index, a capitalization-weighted index composed of 30 major semiconductor companies that measures the performance of the US semiconductor sector.
| Company | Percentage Change |
|---|---|
| Oracle | -9% |
| CoreWeave | -16% |
| Advanced Micro Devices (AMD) | -5% |
| Intel | -4% |
| SanDisk | -4% |
| Micron Technology | -3% |
Banking sector under pressure, Bending Spoons rises on investment
Financial stocks slipped after quarterly earnings from major US banks. Bank of America dropped 5% as third-quarter revenue missed analysts’ estimates. Profit was affected by provisions exceeding $1.2 billion for regulatory penalties tied to shortcomings in detecting potentially suspicious transactions.
Morgan Stanley fell nearly 4% in spite of quarterly results that surpassed expectations, benefiting from stronger equity trading activity. The S&P 500 Banks Index hit its lowest mark in more than four months, highlighting broad-based industry weakness.
Bending Spoons, an Italian tech company specializing in cloud-based software and artificial intelligence applications, rallied after Berkshire Hathaway invested an additional $330 million. The latest funding raised Berkshire’s stake to approximately 4%, with a total investment amounting to $930 million.
The sell-off in bank stocks underscored sector vulnerability to persistent inflation pressures and rising regulatory costs, while select technology companies such as Bending Spoons attracted major new investment despite the broader market decline.
