NASDAQ, S&P 500 plummet as inflation data adds to rate-hike worries

US stocks plummeted on Wednesday after the release of hotter-than-expected consumer inflation data for the month of September raised expectations that the Federal Reserve could raise interest rates. If the rate hike happens, it would make borrowing expensive and affect the buildout of AI data centres and investment in AI companies.

Tech-heavy NASDAQ Composite declined 1.88% to end at 26,692.87, while the S&P 500 fell 1.1% to 7,718.94. Top laggards included CoreWeave, Nebius Group NV, Dell Technologies Inc, Lumentum Holdings, Ciena Corporation, Marvell Technology, Rocket Lab Corp, Advanced Micro Devices and Hewlett Packard Enterprise, among others.

The Dow Jones Industrial Average settled flat with negative bias, down 0.09%, due to gains in stocks such as UnitedHealth Group, Amgen, Merck & Co Inc, Walmart, Johnson & Johnson, JP Morgan Chase and McDonald’s Corp.

The Consumer Price Index (CPI) advanced 0.6% in September after rising 0.4% in August, the U.S. Bureau of Labour Statistics reported. Over the last 12 months, the all items index surged 3.7%.

"The index for gasoline rose 9.1% in September, accounting for over half of the monthly all items increase. The energy index increased 5.2% over the month following a 2.1% increase in August. The shelter index rose 0.4% in September after rising 0.3% in August. The index for food was unchanged in September, as the index for food away from home increased 0.2% and the index for food at home fell 0.1%," the Bureau of Labour Statistics said.

"The index for all items less food and energy rose 0.3% in September, as it did in August. Indexes that increased over the month include recreation, used cars and trucks, education, airline fares, medical care, and apparel. Conversely, the index for communication was among the small number of major indexes that decreased in September," it added.

Brent Crude, the international standard, fell 1.61% to $104.35 per barrel. West Texas Intermediate declined 1.16% to $93.99 a barrel.