US equities started Thursday split down the middle: the Nasdaq Composite sank 1.3% and the S&P 500 slipped 0.5% at the open, while the Dow Jones Industrial Average climbed 0.5%, as tech shares stretched their slump on growing doubts about AI valuations and the cost of funding the buildout.
The catalyst was the September producer price index, released at 8:30 a.m. ET. Wholesale prices rose 1.3% month-on-month, far above the 0.5% economists expected — the biggest one-month jump since March 2022 — according to Bureau of Labor Statistics data reported by Barron's. On a yearly basis, headline PPI hit 6.3% — the biggest 12-month increase since December 2022. Core PPI, which strips out food and energy, rose 0.7% on the month against a 0.3% forecast, its fastest pace in five months, lifting the annual core rate to 5.0%, the highest since January 2023.
This was the second hot inflation print in two days. Wednesday's consumer price report had already shown September CPI at 3.7% year-on-year, accelerating from 3.4% in August, and that put a rate increase at the Fed's October 27-28 meeting back on the table. Today's PPI made the case harder to dismiss. Traders kept the implied odds of an October hike at roughly one in three on Thursday, after the CPI print had pushed pricing toward 50% — consistent with a Fed that raised rates 25 basis points in September and, per the September meeting minutes, saw most participants judging another increase likely appropriate by year-end.
The damage is concentrated where rates bite hardest. Overnight, the Nasdaq fell 1.9% — its biggest single-day drop since July 23 — while the S&P 500 lost 1.1% and the Dow edged 0.1% lower. AI-leveraged names led Wednesday's slide: CoreWeave tumbled 15.5% on concerns about the debt load behind its AI-infrastructure buildout, and it was down another 4% in premarket trading Thursday, while chip stocks extended their losses into a sixth straight session. The Philadelphia Semiconductor Index dropped 4.3% on Wednesday. Earlier, Asian markets took the brunt: South Korea's Kospi and Japan's Nikkei plunged as hot US inflation ripped through the tech supply chain. Our own snapshot at 13:30 UTC put the Nasdaq at 26,418 (-1.03%), the S&P 500 at 7,690 (-0.38%) and the Dow at 51,855 (+0.45%).
Why it matters
Inflation is no longer a CPI-only story — the pipeline is showing pressure too. Gasoline prices surged 20.3% in September, driving most of the goods-side increase, while final-demand energy jumped 10.8% month-on-month and services costs rose 0.8%, per the BLS breakdown. Crucially, core PPI at 5.0% annual tells the Fed that price pressure is spreading beyond the energy shock and into transportation, trade margins and materials — exactly the kind of breadth that keeps a hiking cycle alive.
| Inflation gauge | September m/m | Forecast | September y/y |
|---|---|---|---|
| Headline PPI | +1.3% | +0.5% | 6.3% |
| Core PPI (ex-food & energy) | +0.7% | +0.3% | 5.0% |
| Headline CPI (prior day) | +0.6% | 3.6% y/y | 3.7% |
| Core CPI (prior day) | +0.3% | 2.5% y/y | 2.6% |
Consensus figures for PPI are the FactSet/Dow Jones survey expectations cited by Barron's, TipRanks and CNN; CPI consensus from the September CPI report coverage.
The rotation underneath the index numbers matters more than the headline losses. Money isn't fleeing equities broadly — it's fleeing duration-heavy growth and hiding in value. The Dow's gain on a day the Nasdaq sank is the market saying the risk-free discount rate may move higher again, and cash flows priced decades out are worth less at that rate. With retail sales up 0.9% ex-autos in September and jobless claims holding near 199,000, the economy itself isn't flashing red — which only strengthens the Fed's hand.
What to watch
- The October 27-28 FOMC meeting: any further drift in implied hike odds will move the Nasdaq more than the Dow.
- PCE inflation due October 29 — the Fed's preferred gauge and the next hard data point.
- CoreWeave and the AI-debt complex: Wednesday's 15.5% plunge put the sector's leverage model under scrutiny, and bonds on AI names have been sliding alongside the stocks.
- Whether the semiconductor selloff — now six straight sessions — finds a bid before chip earnings season.
MarketRadar take
Compounding Wednesday's close with Thursday's snapshot, the two-session damage reads Nasdaq -2.91%, S&P 500 -1.47% and the Dow +0.35% — the blue-chip index is actually net higher over the selloff. That arithmetic is the market's real message: this is a targeted repricing of rate-sensitive tech, not a broad liquidation. The trigger is fiscal-to-rate transmission — a 6.3% annual PPI number with a 5.0% core read makes another Fed increase by year-end a live risk, and AI names financed on leverage are the first casualty when the cost of capital jumps. Near term, tech-heavy indexes stay the vulnerable side of this trade; the Dow's resilience is a rotation, not a rescue.
