Nasdaq ends sharply lower as hot inflation data stirs rate-hike worries

The Nasdaq closed sharply lower on Wednesday, marking its biggest daily decline since July 23, following a rise in inflation data. The index fell 1.88% to 26,692.87 points. Worries about potential additional interest rate hikes from the Federal Reserve weighed heavily on shares, particularly those of AI-focused companies. Oracle's stock dropped by 8.8%, while CoreWeave and Nebius saw a steeper decline of 15% and 10% respectively.

Other affected companies included Dell and Hewlett Packard Enterprise, which fell by 11.4% and 8.2% respectively, following Barclays' downgrade of the AI server makers to 'equal-weight' from 'overweight.' The Philadelphia Semiconductor Index also dropped by 4.3%, marking its sixth consecutive day of decline. Despite Apple's stock rising by 0.5%, closing its market capitalization above US$5 trillion for the first time, the market sentiment remained negative.

Inflation data for September showed a sharper increase due to soaring gasoline prices and broader price pressures, which intensified pressure on the Fed to raise interest rates. Fed policymakers are now facing a 37% chance of raising rates this month, up from 22% on Tuesday, according to CME's FedWatch tool. The S&P 500 and Dow Jones both ended the day in decline, with the S&P 500 dropping 1.11% to 7,718.94 points and the Dow Jones ending at 51,621.48 points.

Eight out of the 11 S&P 500 sector indexes declined, led by a 2.6% loss in information technology and a 1.78% loss in communication services.