NASDAQ tumbles 1.88% while Apple rises 0.50%

Hotter-than-expected inflation heightens Fed rate-hike fears

Apple's low-capex model draws attention amid AI borrowing risks

September CPI beats forecasts, fueling tightening concerns

[Reuters]
[Reuters]

US stocks tumbled Wednesday, led by technology shares, as hotter-than-expected inflation data and growing concerns over debt-fueled AI infrastructure spending rattled markets.

September's consumer price index came in above market forecasts, stoking fears of another Federal Reserve rate hike, while the heavy borrowing burdens of AI companies expanding their data centers drew fresh scrutiny. AI infrastructure firms and major semiconductor stocks fell broadly, while Apple bucked the trend with a 0.50% gain — closing above a $5 trillion market capitalization for the first time.

On the New York Stock Exchange Wednesday (local time), the Dow Jones Industrial Average fell 48.62 points, or 0.09%, to close at 51,621.48. The S&P 500 dropped 86.51 points, or 1.11%, to 7,718.94, and the NASDAQ Composite slid 511.51 points, or 1.88%, to 26,692.87.

Apple ended the session with a market cap of $5.01 trillion, up 0.50% from the previous close. It became only the second US-listed company to close above the $5 trillion threshold, after Nvidia. Apple's market cap had briefly crossed $5 trillion during intraday trading on multiple occasions, but Wednesday marked the first time it held that level at the closing bell.

Apple's outperformance highlighted a contrast in business model and investment strategy at a time when AI-driven financing pressures have emerged as a new market risk. The company's long-standing restraint on large-scale capital expenditure has been credited with improving capital efficiency and limiting investment burdens. With AI infrastructure firms' borrowing risks now a central market concern, Apple's relatively light capex profile drew added attention.

Worries over the financing structures of AI companies, meanwhile, amplified the selloff in tech stocks. CoreWeave, an AI cloud company, plunged 15.46% as concerns mounted over its borrowing load for data center expansion. The yield on CoreWeave's corporate bonds maturing in 2032 jumped to 14.8%, and bond prices fell below 78 cents on the dollar, signaling heightened credit risk in the debt market as well.

Related stocks also fell sharply. Oracle, which has taken on heavy debt to expand its data center investments, dropped 8.8%, while neocloud provider Nebius fell 10.1%. Nvidia declined 3.2% and Micron Technology lost 3.88%. Other major semiconductor names retreated across the board — AMD fell 2.28%, SanDisk dropped 5.97%, Intel slid 3.20%, and SK hynix's American depositary receipts lost 4.02%.

The session's main shock came from inflation data. According to the US Department of Labor, the September CPI rose 3.7% from a year earlier, topping both August's 3.4% reading and the market consensus of 3.6%. Core CPI, which strips out volatile energy and food prices, climbed 2.6% year-on-year and 0.3% month-on-month, also exceeding expectations. Energy prices were a key driver, with gasoline surging 9.1% from the prior month.

The stronger-than-expected inflation print intensified fears that the Fed could raise its benchmark interest rate again this month. The implied probability of an October rate hike in federal funds futures soared to 51.5% immediately after the CPI release — more than double the 22.1% priced in on Wednesday. The probability later pared some of its gains, but the retreat in rate-cut expectations and renewed tightening concerns weighed on risk appetite across asset classes.


kacew@heraldcorp.com