AI-linked stocks sell off worldwide on inflation and debt fears; Wall Street steadies

The S&P 500 fell 1.1 percent on Wednesday, the steepest drop in more than two months, the New York Times reported. The Guardian said the Nasdaq Composite fell 1.9% that day and called the S&P 500's fall its worst performance since July. CNN said the Nasdaq and S&P 500 had their worst day since July as shares of companies involved in the AI buildout, including chipmakers, tumbled. [ 1 , 3 , 4 ]

The sell-off spread to Asia. The Guardian reported that South Korea's Kospi 200 fell more than 8% overnight to a six-month closing low, with circuit breakers halting trading at various points. SK Hynix and Samsung Electronics fell nearly 11% and 9.5%, and the index closed down 8.1%. Japan's Nikkei 225 dropped 4.9% on Thursday after Kioxia slumped 11% and SoftBank, a big investor in OpenAI, fell 10%. AP gave the Kospi's fall as 7.6% and the Nikkei's as 4.9%. [ 3 , 8 ]

The Guardian linked the moves to US data showing inflation rose to 3.7% in September, higher than expected and the fastest increase since the consumer price index rate hit a three-year peak of 4.2% in May. Data on Thursday showed US producer prices up 6.3% year on year in September, the sharpest rise since December 2022. Investors were expecting fresh Federal Reserve rate increases, the Guardian said. MarketWatch wrote that investors wondered whether steep inflation and higher borrowing costs could derail the AI buildout, and Bloomberg said markets awaited Fed Chair Kevin Warsh. [ 2 , 3 , 7 ]

On Thursday, the Nasdaq dropped another 1.4% at the start of trading, with Dell and Coherent among the early fallers. US indexes then recovered. The S&P 500 rose 0.33% and the Dow rallied 556 points, or 1.08%, while the Nasdaq closed 0.08% higher, CNN reported. Treasury yields dropped as bonds rallied. A chip-stock index fell 0.88%, its seventh straight daily decline, after dropping as much as 4.4%. NBC News said the S&P 500 ended Thursday 1% below its record from a week earlier and the Nasdaq more than 3% below its peak. [ 3 , 4 , 6 ]

CNN quoted a note by Saxo strategist Neil Wilson, who cited worries about the AI buildout, valuations, lower-than-expected earnings growth at leading US frontier labs, Chinese competition, inflation and rates. NBC News said the Financial Times reported slower quarterly revenue growth at Anthropic, whose revenue is nearly $17 billion; the company said it is profitable. CNN said multiple outlets reported Anthropic announced sales grew 45% to $17 billion last quarter. Bloomberg's summary mentioned a CoreWeave crash and new calls to delay Anthropic's IPO. [ 4 , 6 , 7 ]

NBC News added that investors have begun selling bonds backing some data centers, and that economist Ed Yardeni cut his year-end S&P 500 target to 7,900 from 8,400. It also reported fears that Chinese mass production of memory chips could flood the market with an oversupply. A CNN headline dated 16 October said the Nasdaq sank more than 2% as investors raised questions about AI debt; no further text was available. [ 6 , 9 ]