US stock markets open in red after September CPI beats expectation at 3.7%; bond yields surge and tech stocks plunge

The US stock markets opened in deep red on Wednesday, after retail inflation topped forecasts. The NASDAQ 100 plunged over 200 points at the open on Wednesday, as higher inflation increased bets for further rate hikes. The Dow Jones and S&P 500 also fell over 0.3% amid broader soured sentiment.

CPI inflation beats forecast

The annual rate of inflation increased by 3.7% for September 2026, as compared to 3.4% in the previous two months and higher than the market expectations of 3.6%. The Gasoline and fuel oil prices for the month surged 34.2% and 74%, respectively. On a monthly basis, inflation surged by 0.6% as compared to 0.4% in August and in line with the forecasts. Core inflation also surged by 2.6% vs. 2.4% in the previous month, highlighting rising prices in the economy.

Bond yields surge

Following the above expected inflation print, bond yields recouped all the lost ground in the past few trading days. The US 10Y bond yields surged back above 5.3%. The 2Y bond yields hit the 4.95% mark, surging 119 bps. Higher bond yields have once again raised fresh concerns over elevated borrowing rates and their impact on mounting Federal debt. Federal Reserve raised the bank rates by 25 bps in the September policy meeting and bets on another rate hike in November increased aggressively after hot inflation print.

Stocks plunge

The hot inflation print worried equity investors as rising borrowing costs pose a threat to the hot AI-infrastructure theme, which is financed by heavy debt. Among the semiconductor pack, shares of NVIDIA (-1.5%), Broadcom (-2.0%), Micron Technology (-1.0%), Advanced Micro Devices (-3.0%), and Intel Corporation (-2.0%) were among the top losers.

Similarly, among the Magnificent Seven, shares of Apple Inc. (+1.2%) and Alphabet Inc. (+0.5%) were the only two gainers, while Nvidia (-1.8%), Microsoft (-0.3%), Amazon Inc. (-0.3%), Meta Platforms (-2.4%), and Space Exploration Technologies (-2.4%) were the losers amid rising borrowing costs.

Meanwhile Morgan Stanley shares plunged over 3% despite a robust earnings growth. The company’s equity revenue jumped 41% YoY and the wealth management business rose jumped 10% to $9.1 billion. The total Q3 revenue jumped 11.6% YoY to $20.6 billion, while the earnings per share rose from $2.80 per share to $3.0 per share, beating estimates of $2.9 per share. The company kept $141 million in provisions for credit losses vs zero in the same quarter a year ago.