TLDR
- The Nasdaq fell 1.88% and the S&P 500 lost 1.11% after September inflation data came in hotter than expected.
- Traders now see a 37% chance of a Fed rate hike this month, up from 22% a day earlier.
- AI-linked stocks fell hard, including Oracle, CoreWeave, Nebius, Dell and Hewlett Packard Enterprise.
- Apple closed above a $5 trillion market value for the first time.
- U.S. futures were lower Thursday, and South Korea’s Kospi dropped more than 7%.
Wall Street had its worst day in about two months on Wednesday after hotter-than-expected inflation data. The report raised worries that the Federal Reserve could raise interest rates again.
The Nasdaq fell 1.88% to 26,692.87, its biggest daily drop since July 23. The S&P 500 lost 1.11% to 7,718.94, its largest one-day decline since July 29. The Dow Jones Industrial Average slipped 0.09% to 51,621.48.
Eight of the 11 S&P 500 sectors fell. Information technology dropped 2.6%, while communication services lost 1.78%.
What the inflation report showed
The Labor Department said consumer prices rose faster than expected in September. Gasoline costs jumped, and price pressures spread beyond energy.
Traders now see a 37% chance the Fed will raise rates this month, according to CME’s FedWatch tool. That is up from 22% on Tuesday.
Rate hike odds bumped higher. 📈
Following today's hotter-than-expected CPI print, market-implied odds for a 25 bps Fed hike on Oct 28 jumped to 33.2%, up from 22.1% the previous day and 17.7% last week according to CME FedWatch. pic.twitter.com/xxat4jrVH1
— Lark Davis (@LarkDavis) October 14, 2026
Fed Vice Chair for Supervision Michelle Bowman said before the data that the central bank has time to watch how markets react to its September rate increase.
“Inflation remains public enemy number one for the market and for the Fed,” said Adam Sarhan of 50 Park Investments.
Tech and bank stocks lead losses
AI-linked stocks that are sensitive to borrowing costs took the biggest hits. Oracle fell 8.8%. CoreWeave dropped 15% and Nebius lost 10%.
Dell sank 11.4% and Hewlett Packard Enterprise fell 8.2% after Barclays cut both to “equal-weight” from “overweight.” The Philadelphia Semiconductor Index fell 4.3%, its sixth straight daily decline and its longest losing streak since May 2025.
Bank of America fell 4.8% after its third-quarter profit dropped. The bank set aside $1.2 billion for regulatory fines tied to failures to detect possible money laundering. Morgan Stanley slipped almost 3% even though its quarterly profit rose.
Apple rose 0.5%, and its market value closed above $5 trillion for the first time. Bending Spoons jumped 41% after Berkshire Hathaway invested another $330 million in the owner of Vimeo and AOL.
The S&P 500 is still up almost 13% in 2026 after hitting a record high last week. Most of that gain came from AI-related stocks. The median S&P 500 stock is up 4%, and more than 200 index members are down for the year.
Markets on Thursday
U.S. stock futures were lower early Thursday. S&P 500 futures fell between 0.3% and 0.5% in separate reports, and Nasdaq-100 futures dropped 0.83%. Some reports tied the weakness to worries about Anthropic’s growth.
Asian markets fell sharply. South Korea’s Kospi dropped more than 7%, led by SK Hynix and Samsung Electronics. Japan’s Nikkei 225 fell 4.4%, and the Hang Seng slid 1%.
Investors are waiting for September producer prices, retail sales and weekly jobless claims, all due at 8:30 a.m. ET Thursday. U.S. Bancorp, PNC and Charles Schwab are set to report earnings.
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