Stock Market Selloff Deepens as Hot CPI Lifts Rate-Hike Odds
A hotter-than-expected September CPI report lifted Fed rate-hike odds and deepened the stock market selloff Thursday, as AI infrastructure debt concerns sent CoreWeave and Oracle tumbling and the selloff spread to Asia overnight.
Market Snapshot
All figures are indicative opening levels as of this morning, October 15.
Equity futures were mixed Thursday, with Dow futures firmer even as S&P and Nasdaq futures extended Wednesday’s slide.
The pressure traces to Wednesday’s September CPI report, which rose 0.6 percent month over month and 3.7 percent year over year against expectations of 3.6 percent, lifting the odds of another Fed rate hike.
Gold and silver pushed higher as investors sought safety, while the dollar eased.
CoreWeave and Oracle stayed under pressure in premarket trading after Wednesday’s double-digit declines tied to AI infrastructure debt concerns, while Nvidia slipped alongside the broader chip complex.
Main Story
Markets are reassessing how the AI buildout gets financed now that higher rates make that debt more expensive to carry.
- CoreWeave fell 15.46 percent and Oracle dropped 8.83 percent Wednesday as the hot CPI reading reignited worries that neocloud providers and hyperscalers have taken on heavy debt loads to fund data center construction.
- The mainstream explanation is a rates story: a hotter CPI print raises the odds of another Fed hike, raising the cost of servicing debt for companies like Oracle, which is funding a $90 billion to $95 billion capital plan next fiscal year.
- What the market may be underpricing is how fast the worry can travel. Investor Chamath Palihapitiya’s warning on AI debt exposure, which drew a one-word “Yikes” from Elon Musk, helped push the selloff into Asia overnight, where South Korea’s Kospi tripped a circuit breaker and fell 7.57 percent.
Chart of the Day
The S&P 500 set a fresh all-time high of 7,844.52 on October 6 before logging its fifth decline in six sessions, closing Wednesday at 7,718.94, just above its 200-day moving average.
Wednesday’s hot CPI report and the AI-debt selloff in CoreWeave and Oracle drove the retreat, though S&P futures pointed to a steadier 7,749 open Thursday.
The question now is whether the 200-day moving average near $7,707 holds as support if the selling resumes.
Technical Trading
A few levels drawn from technical analysis on the S&P 500, sourced from Investing.com.
- RSI(14) reads 33.707, nearing oversold territory after six sessions of heavy selling.
- The index is holding just above its 200-day moving average near $7,707, which has become the key line in the sand for the broader uptrend.
- The 50-day moving average near $7,789 has flipped to resistance, and MACD(12,26) at -20.053 confirms a sell signal, though the daily summary still reads Neutral overall.
Global News
- September CPI rose 0.6 percent month over month and 3.7 percent year over year, hotter than the 3.6 percent economists expected, lifting the odds of another Fed rate hike.
- CoreWeave fell 15.46 percent and Oracle dropped 8.83 percent Wednesday, the epicenter of a broader selloff tied to worries over AI infrastructure debt and financing costs.
- The selloff spread to Asia overnight, with South Korea’s Kospi tripping a circuit breaker and falling 7.57 percent and Japan’s Nikkei dropping 4.90 percent.
- Elon Musk replied “Yikes” to investor Chamath Palihapitiya’s warning about private credit exposure tied to AI data center financing, amplifying debt concerns across the sector.
- September Producer Price Index data arrives Thursday, the next test of whether inflation pressure is broadening beyond consumer prices.
Texas News
The Federal Reserve Bank of Dallas’ third-quarter energy survey showed Permian Basin oil and gas activity still expanding, though at a slower pace, with the broader business activity index slipping to 38.8 from 46.1 last quarter.
Oil and natural gas production indexes both climbed further, even as operators across the basin cited rising cost pressures.
Looking Ahead
Thursday, October 15: September Producer Price Index data lands, testing whether input-price pressure is broadening beyond what Wednesday’s CPI report showed.
Tuesday, October 20: Netflix reports third-quarter earnings, the next read on how corporate America is absorbing higher borrowing costs.
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Prices from Yahoo Finance, CNBC and Fortune. Technical levels from Investing.com and FXStreet. News from Reuters, Al Jazeera and CNBC.
For informational purposes only. Not investment advice. Prices are indicative opening levels and may differ from your broker.
