Stock Market Selloff: Tech Stocks Tumble on Fed Hike Fears

U.S. stocks are heading for another rough session Thursday as a stock market selloff sparked by hotter-than-expected September inflation rolls into its fourth day. Nasdaq futures pointed to a drop of about 1.2% in premarket trading, while S&P 500 futures slipped roughly 0.3% and Dow futures edged up about 0.2%, according to morning market readings cited by Investopedia.

The selloff, which sent the Nasdaq Composite down 1.88% and the S&P 500 down 1.11% on Wednesday, has been driven by a rapid repricing of Federal Reserve policy expectations after September’s Consumer Price Index came in hotter than forecast. Wednesday’s inflation report lifted the implied odds of a Fed rate hike at the central bank’s October 27–28 meeting to about 31.6%, up from roughly 22% a day earlier, according to the CME Group’s FedWatch tool cited by Reuters.

Stock Market Selloff: Nasdaq Futures Lead Premarket Declines

Tech stocks remain at the center of the stock market selloff. Nasdaq 100 futures were down about 1.1–1.2% early Thursday, while S&P 500 futures traded around 0.3% lower. Dow futures, in contrast, rose roughly 0.2–0.3%, suggesting the damage is concentrated in growth and AI-related shares rather than the broader market, per live premarket data reported by the Economic Times.

The rout carried through Asia overnight. Japan’s Nikkei 225 fell roughly 4.5%, South Korea’s KOSPI tumbled more than 5%, and the MSCI Asia-Pacific index outside Japan dropped about 1.2%, Reuters reported. The Hang Seng in Hong Kong finished about 1% lower, with its tech index down roughly 2.7%, according to Capital Street FX. European stocks held up better, with the FTSE 100 trading slightly higher in London.

What Drove the CPI Surprise

The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index rose 0.6% month over month in September, pushing the 12-month headline inflation rate to 3.7%, up from 3.4% in August. Economists had expected a 3.6% annual rate. Core CPI, which strips out volatile food and energy prices, advanced 0.3% for the month and 2.6% on an annual basis, both slightly above estimates.

Gasoline prices were the biggest culprit, rising 9.1% on the month and accounting for more than half of the monthly CPI increase, according to data reported by StockInvest.us and Capital Street FX. The 10-year Treasury yield jumped to about 5.28% in the wake of the report before pulling back Thursday morning to roughly 5.09% — a three-week low — as investors weighed the growth implications of a possible Fed hike.

“While the initial selloff was triggered by the hotter-than-expected CPI, tech was the main driver of today’s selloff,” JPMorgan analysts wrote in a note cited by Reuters, pointing to financing risks and IPO timelines around AI infrastructure as central concerns.

AI and Chip Stocks Bear the Brunt

The Philadelphia Semiconductor Index fell 4.3% on Wednesday, its sixth straight daily loss, as AI-linked names sensitive to borrowing costs were hammered. The biggest decliners included:

• CoreWeave: tumbled 15.5% Wednesday and fell another 6.3% in premarket trading Thursday, as concerns mounted over the heavily indebted data-center operator’s balance sheet.
• Dell: dropped 11.3% on Wednesday amid the AI infrastructure credit scare.
• Oracle: slid 8.8% as investors worried about debt taken on to fund AI data centers.
• Marvell: fell 8.7%, with the broader chip index extending its losing streak.
• Nvidia: dropped 3.2%, while ASML fell 3.9%.

Banks had a mixed day. Bank of America fell 4.8% after reporting a $1.2 billion regulatory charge and missing revenue estimates, while Morgan Stanley slipped 2.8% even though its earnings topped expectations on a 41% surge in equities trading revenue, according to the StockInvest.us market recap.

TSMC Shares Lower Despite Record Profit

Taiwan Semiconductor Manufacturing posted its sixth consecutive record quarterly profit on Thursday, with third-quarter net profit up 68.7% to NT$763.1 billion on NT$1.49 trillion in revenue — both ahead of analyst estimates — and guided fourth-quarter revenue of $52.3–54.3 billion. Yet TSMC shares moved lower in premarket trading after management warned of macroeconomic uncertainty in 2027, deepening the gloom around AI stocks, the Economic Times reported.

What Analysts Are Watching Next

Investors now turn to a heavy data slate Thursday morning. The September Producer Price Index, retail sales, and weekly jobless claims are all due at 8:30 a.m. ET, and each could swing Fed expectations. Consensus expects about 200,000 initial jobless claims versus 197,000 the prior week, according to Capital Street FX.

Traders are also watching the Federal Reserve Chair’s scheduled speech on Friday for any signal ahead of the October 27–28 FOMC meeting. Futures markets now price about a 31.6% chance of a quarter-point hike later this month and roughly a 67% chance of a hike in December, per CME FedWatch data cited in morning reports. On the earnings calendar, Charles Schwab, US Bancorp, and Freeport-McMoRan report Thursday.

Yields, Commodities and Crypto

In commodity markets, WTI crude futures traded around $95.40 per barrel Thursday morning, while Brent crude held near $104 amid reported Houthi attacks on Saudi Arabia and shipping fears around the Strait of Hormuz. Gold futures rose about 1.4% to roughly $4,165 an ounce as investors sought safety, per Investopedia. Bitcoin traded around $80,800, down from above $84,000 the prior day, as the broader risk-off mood spilled into crypto.

The Cboe Volatility Index, Wall Street’s fear gauge, rose 10.35% to 16.85 on Wednesday, a day-trading recap showed — a sign that investors are hedging for more turbulence as the Fed’s October decision draws closer.