Nasdaq Drops 4.5% as Hot Inflation Data Sparks Rotation Out of AI Stocks
Updated
Updated · CNBC · Oct 17
Nasdaq Drops 4.5% as Hot Inflation Data Sparks Rotation Out of AI Stocks
3 articles · Updated · CNBC · Oct 17
Summary
The Nasdaq logged its worst week since June, falling 4.5% and snapping a four-week winning streak, while the S&P 500 lost 2% as investors dumped AI-linked shares.
September CPI rose 3.7% from a year earlier versus 3.6% expected, and PPI jumped 1.3% on the month and 6.3% annually, stoking fears the Fed will keep rates higher for longer.
Semiconductor and AI infrastructure names led the retreat: the VanEck Semiconductor ETF fell 10%, CoreWeave sank 25%, and its rising bond yields and CDS spreads deepened concern about AI financing risk.
The Dow gained 0.7% as money rotated into healthcare and consumer staples, with Kimberly-Clark and Eli Lilly among beneficiaries while Meta, Microsoft and Salesforce held up better than most tech names.
Solid bank earnings from Goldman Sachs, Wells Fargo and Bank of New York offered some support, but the broader message was that inflation and borrowing costs are now overshadowing strong quarterly results.