The S&P 500 opened down 0.4%, but the real pain was in tech. The Nasdaq Composite slipped more than 1%, extending a two-day slide. Meanwhile, the Dow Jones Industrial Average bucked the trend, rising 0.6%. Investors are scrambling to price in the latest inflation prints alongside the massive capital expenditure cycle for artificial intelligence infrastructure. The divergence signals a market that is punishing high-multiple growth while seeking safety in value plays.
Semiconductors took the biggest hit. Micron Technology shed 4%, and Advanced Micro Devices dropped 5%. It wasn't just domestic names. South Korea’s Kospi index crashed over 7% overnight, dragging down US-listed SK Hynix shares by 5%. Sandisk also fell 6%. The sell-off reflects deep anxiety over whether AI revenues can justify current valuations.
The catalyst was the September Producer Price Index. It jumped 1.3% month-on-month and 6.3% year-on-year. That’s the biggest spike since 2022. Economists polled by Dow Jones expected a much softer 0.6% monthly and 5.5% annual rise. The miss is significant. It suggests sticky inflation is here to stay, complicating the Federal Reserve’s path to rate cuts. For traders, this means higher-for-longer interest rates are back on the table.
AI infrastructure names are bleeding. CoreWeave slid 7%, on top of a brutal 15% drop the previous day. The market is questioning the sustainability of the borrowing required to build out AI data centers. Corporate bond yields for the firm are spiking. According to CNBC, Anthropic’s Q3 revenue hit $16.8 billion. While impressive, some investors argue it’s not enough to support the astronomical costs of the chip supply chain. The gap between revenue and infrastructure spend is widening, and the market is punishing that gap.