US Stocks Move: Hotter-Than-Expected CPI Fuels Rate Hike Bets, Nasdaq Falls 0.6% as Most Mega-Cap Tech Stocks Weaken

On Wednesday, the three major US stock indices opened lower collectively, with the Nasdaq dropping 0.6%, as most mega-cap technology stocks weakened.

Advanced Micro Devices Inc (AMD.US) fell nearly 4%, while SpaceX (SPCX.US) and SanDisk Corp (SNDK.US) each declined more than 2%. NVIDIA Corp (NVDA.US), Meta Platforms Inc (META.US), and Tesla Inc (TSLA.US) each dropped more than 1%.

On the news front, the US September unadjusted core CPI annual rate rose to 2.6%, the highest since June of this year, exceeding the market expectation of 2.5%. The US September seasonally adjusted core CPI monthly rate came in at 0.3%, above the market expectation of 0.2%. The US September unadjusted CPI annual rate registered 3.7%, the highest since May of this year, surpassing the market expectation of 3.6%. The US September unadjusted CPI monthly rate came in at 0.6%, the highest since April of this year, in line with expectations.

Following the release of the CPI data, the market increased its bets on a Federal Reserve rate hike in October, boosting wagers that the Fed will raise rates three more times before the end of 2027. Olu Sonola, head of US economics at Fitch Ratings, said this inflation report serves as a red-flag warning for the Federal Reserve. Energy inflation pushed up the headline figure as expected, but the real problem is that core inflation (super core services inflation) remains stuck above 3%. Higher energy costs are beginning to seep into broader services prices, increasing the risk that this inflation outbreak will persist. A rate hike by the end of this month is now clearly in the discussion, though December remains the more likely timing for action.