Stock Market Hot Inflation Hits Tech and Asian Chip Stocks
U.S. stocks fell after inflation data came in hotter than expected, with the Nasdaq down 1.9% and the S&P 500 off 1%. The sell-off extended across Asian…
Yahoo Finance reported that hotter-than-expected inflation pushed U.S. stocks lower on Wednesday, with the Nasdaq Composite falling 1.9% and the S&P 500 dropping 1%. The sell-off also reached Asian chip stocks, putting technology shares under pressure as investors reconsidered the outlook for interest rates.
The Dow Jones Industrial Average slipped 0.1%. September’s Consumer Price Index rose 3.7% year over year, compared with economists’ expectation of 3.6%, according to Yahoo Finance. Higher gas and energy prices drove the increase, while the report lowered the odds that the Federal Reserve would hold rates steady at its next policy meeting.
The pressure carried into Thursday’s trading in Asia. South Korea’s Kospi closed 8% lower, while Samsung Electronics and SK Hynix fell 9% and 11%, respectively, according to a Yahoo Finance live blog citing Business Insider. Japan’s Nikkei 225 ended 5% lower, Taiwan’s Taiex fell 3%, and TSMC lost 2%.
The moves matter beyond technology investors: higher borrowing costs could also weigh on financial services, while households and businesses face the prospect of rates staying elevated for longer. The inflation report has sharpened that concern, even as companies continue to report quarterly results.
Inflation data revives rate concerns
Daniela Hathorn, senior market analyst at Capital.com, said the CPI report “were a bucket of cold water for dovish hopes.” She said inflation remains above target in the United States and is moving further away from it.
Hathorn also cautioned against attributing persistent price pressure solely to energy. She said core services remain a bigger contributor than energy, a concern for a central bank focused on bringing inflation back to 2%.
“This all but confirms that the Federal Reserve is going to hike rates again, possibly even at the meeting in two weeks,” Hathorn said. She added that markets now view the outcome probability as a coin flip, a shift from more dovish expectations after September’s softer labor-market data.
That prospect has added to pressure on semiconductor shares. Yahoo Finance reported that Nvidia declined more than 3% on Wednesday, leading the sector lower. Investors also awaited Taiwan Semiconductor earnings on Thursday for further confirmation of demand tied to artificial intelligence.
ASML offered a counterpoint. The chip equipment maker reported record third-quarter sales on Wednesday and raised its full-year outlook amid strong AI demand. The broader semiconductor sell-off continued, however, as investors weighed higher rates and competition concerns.
Bank earnings add another market signal
Financial company results also shaped the session. Bank of America shares fell 4.7% on Wednesday as a $1.2 billion regulatory penalty weighed on earnings. BlackRock shares rose after its third-quarter earnings beat analyst expectations, while results from Bank of America and Morgan Stanley rounded out reporting among major Wall Street banks.
Those firms have indicated that consumers are holding up despite higher interest rates, Yahoo Finance reported. The inflation reading raises a separate question for investors: whether borrowing costs could begin to weigh more heavily on financial services activity.
In the next set of scheduled results, U.S. Bancorp, PNC Financial Services and Charles Schwab were due to report. Investors were also watching whether the inflation-driven reassessment of rate prospects would continue to pressure technology and memory-chip shares.
Source: finance.yahoo.com
