Wall Street tumbles as hot inflation data feeds worries about Fed rate hikes

Wall Street experienced a sharp decline on Wednesday following the release of hotter-than-expected inflation data. Concerns about additional interest rate increases from the Federal Reserve weighed heavily on the market, particularly affecting companies with significant exposure to higher borrowing costs. AI stocks, in particular, felt the impact of investors' increased belief that the Fed may need to take further action to curb inflation.

Notable declines included Oracle, which saw a 7.3% drop, and AI infrastructure firms CoreWeave and Nebius, both plummeting by 15% and 10% respectively. Dell and Hewlett Packard Enterprise also suffered, with shares falling 12% and 7.6% respectively. These drops came after Barclays downgraded the AI server makers to "equal-weight" from "overweight."

The Philadelphia Semiconductor index, which tracks semiconductors, dropped nearly 4%, marking its sixth consecutive day of decline and its longest losing streak since May 2025. September data from the Bureau of Labor Statistics showed that US consumer prices accelerated, with gasoline costs surging and inflation pressures spreading beyond energy. Interest rate traders now have a 37% chance of a Fed rate hike occurring in the near future.