Nasdaq Plunges 500 Points as Fed Rate Hike Expectations Rise; AI Hardware and Tech Stocks Lead Losses; Nvidia Falls Over 3%

TradingKey - U.S. September CPI data came in higher than market expectations, fueling expectations of a Fed rate hike in October and dampening market sentiment, sending U.S. stocks lower. AI hardware, tech, and bank stocks led the decline.

At the close, the Dow Jones Industrial Average fell 0.09% to 51,621.48; the Nasdaq Composite Index dropped 1.88% to 26,692.87; and the S&P 500 Index lost 1.11% to 7,718.94.

Tech Stock Performance

Oracle (ORCL) fell 8.82% to $130.57.

Oracle again urged federal regulators to approve a natural gas pipeline as soon as possible to meet the power demands of its large data center project in New Mexico. In a Tuesday letter to the Federal Energy Regulatory Commission, Josh Pitcock, Oracle's senior vice president of government affairs, noted that if the commission continues to delay approval of the pipeline project operated by a subsidiary of Energy Transfer LP, it would "threaten the operational schedule of Project Jupiter and in turn jeopardize the resulting jobs, economic activity, and community benefits."

Nvidia (NVDA) fell 3.16% to $221.30.

Nvidia Chief Executive Jensen Huang said he would stop supplying chips to customers if they were developing unsafe AI software, though he believes there is no need to be so concerned about the technology at present. "Many young companies are going through growing pains, and they are growing at an astonishing speed," Huang said. "Building a company comes with accountability and responsibility, and they are gradually adapting to these requirements."

Among big tech stocks, Apple (AAPL) rose 0.50%; on the downside, TSMC (TSM) fell 3.40%, Meta Platforms (META) fell 3.27%, Nvidia (NVDA) fell 3.16%, Broadcom (AVGO) fell 3.10%, SpaceX (SPCX) fell 2.80%, Tesla (TSLA) fell 2.15%, Microsoft (MSFT) fell 1.80%, Google (GOOGL) fell 1.74%, and Amazon (AMZN) fell 1.74%.

[Source: FutuBull]

The Philadelphia Semiconductor Index fell 4.3% to 11,684.38 points. Among its 30 constituents, 29 declined and 1 advanced.

Among memory stocks, SK Hynix (SKHY) fell 6.06%, SanDisk (SNDK) fell 5.33%, Seagate Technology (STX) fell 4.50%, Western Digital (WDC) fell 4.36%, and Micron Technology (MU) fell 4.08%.

Among optical communications stocks, Applied Optoelectronics (AAOI) fell 11.82%, Lumentum (LITE) fell 9.28%, and Marvell Technology (MRVL) fell 8.72%.

Company News

Berkshire Hathaway Invests Additional $330 Million in Bending Spoons

According to Bloomberg, Bending Spoons received an additional $330 million investment from Berkshire Hathaway, bringing its stake in Bending Spoons to 4%. Berkshire's investment provides Bending Spoons with more capital for acquisitions as the Milan-based company continues to expand its digital portfolio. Berkshire previously invested $600 million in Bending Spoons' July IPO.

Trump Announces GlobalFoundries and Alaska LNG Investment Plans, with Japan and South Korea Providing Funding

U.S. President Donald Trump announced that GlobalFoundries will invest $21 billion in Malta, New York, to build two large new semiconductor manufacturing facilities, with funding to be provided by Japan under a previously reached trade agreement. The project is expected to create 27,000 construction and supply chain jobs, as well as more than 1,000 highly skilled manufacturing jobs. Trump also announced that the U.S. government will acquire a stake in GlobalFoundries and that the Commerce Department will invest an additional $955 million in silicon photonics, silicon-germanium, and advanced packaging, bringing total cumulative investment to $1.63 billion, with the government's current stake reportedly valued at over $2 billion.

Netflix Is Cutting Around 6% of Its Global Workforce

According to The Wall Street Journal, Netflix is cutting about 6% of its global workforce, affecting approximately 1,000 jobs. This marks the company's largest round of layoffs since 2022, driven by slowing growth and declining user engagement. In an email to employees, co-CEOs Greg Peters and Ted Sarandos stated that the job cuts primarily impact the company's product, technology, legal, and human resources teams. According to data from Antenna, Netflix's churn rate in the U.S. is just slightly above 2%, well below other industry peers.

Industry & Macro News

US September CPI Up 3.7% YoY, Core CPI at 2.6% Beats Expectations, October Rate Hike Expectations Surge

Data released by the US Bureau of Labor Statistics showed that the September Consumer Price Index (CPI) rose 3.7% year-on-year, marking the largest gain in five months, higher than market expectations of 3.6% and widening further from the previous reading of 3.4%. Core CPI rose 2.6% year-on-year, also exceeding the expected 2.5%, compared with the previous reading of 2.4%. This represents the fastest increase in US consumer prices in five months, with the persistence of inflationary pressure surpassing earlier market forecasts.

Fed's Goolsbee: September Inflation Disappointing, but More Data Needed Before Rate Hike

Chicago Fed President Austan Goolsbee stated that the higher-than-expected US September inflation data was disappointing, particularly as services inflation remained above 5% and core goods price increases did not moderate as expected, suggesting inflationary pressures may be more stubborn than previously judged. He pointed out that if core inflation continues at an annualized monthly rate of around 4%, it would be completely unacceptable and the Fed must take policy action. Goolsbee noted it is still unclear whether existing interest rates are sufficient to return inflation to the 2% target, leaning toward awaiting more data before deciding on further rate increases. However, if inflation figures remain at current levels in the coming months, the Fed cannot sit idly by. He stressed that the latest data further indicates inflation is not a transitory phenomenon and its slowdown is taking longer than previously expected.