US stocks fell Friday as chip stocks sold off, with the Dow down 0.2%, the S&P 500 down 0.9% and the Nasdaq Composite down 1.6%.
October headline CPI rose 0.4% month on month versus 0.3% expected and core CPI rose 0.3% versus 0.2% expected, shifting rate expectations hawkishly.
Cerebras Systems surged 18% in premarket after strong third-quarter results and a Microsoft partnership, while Modine jumped 22% on a report Samsung is in talks to acquire it.
Nvidia fell 7% after a report of a CEO affair, with the Wall Street Journal reporting the board is weighing whether to oust Jensen Huang.
BofA Global Research added a 25-basis-point Fed hike in January 2027 to its forecast after the hot October CPI reading.
Cerebras Systems shares are surging 18% in premarket action after the chipmaker delivered strong third-quarter results and reported a partnership with Microsoft. Modine Manufacturing shares are jumping 22% after a report that Samsung Electronics is in discussions to acquire the maker of data center cooling systems. Strategy shares are down 2% near a three-month low and Coinbase Global is slipping more than 2% as bitcoin slides, while Cisco Systems and Applied Materials are set to open down 2% and barely changed respectively after earnings late Thursday.
Markets have repriced rate expectations more hawkishly after Fed Governor Waller's remarks and hotter-than-expected US inflation data. Pricing shows 28 basis points of Fed hikes by year-end, including an 88% probability of a 25 basis point hike at the next meeting, and 88 basis points through 2027. October headline CPI rose 0.4% month on month versus 0.3% expected, while core CPI rose 0.3% versus 0.2% expected.
Cerebras Systems shares soared ahead of the US market open after the chipmaker gave sales guidance well above estimates and unveiled new deals with Oracle and Microsoft. Cisco Systems declined after reporting a 21% rise in product orders in fiscal first quarter, missing expectations, with gross margins seen coming under pressure in the next few quarters. Applied Materials inched higher after fourth-quarter results beat expectations and its outlook for adjusted first-quarter earnings was stronger than expected.
BofA Global Research said it now expects the Federal Reserve to deliver an additional 25-basis-point increase in January 2027, on top of its prior forecast of hikes in December and March, after a hotter-than-expected October CPI reading. Economists led by Aditya Bhave said the central bank can no longer afford to raise rates at a quarterly pace. Markets priced an 89.7% chance of a 25-basis-point hike in December and a 10.3% chance of a 50-basis-point move, according to the CME FedWatch Tool.
Semiconductor and AI infrastructure stocks led market losses, weighed down by Nebius lowering its full-year revenue forecast to $3-3.2bn and by analyst downgrades, while AMD fell 9.50%. Steris rose 4% after reporting second-quarter revenue of $1.6bn, above the $1.56bn analysts expected, and an upgrade by Jefferies with a $305 price target. Alnylam Pharmaceuticals gained 6% after director Amy W Schulman bought 1,910 shares worth $299,526.
All three major indexes were headed for weekly wins despite a volatile stretch that briefly pushed the Nasdaq into correction territory. Nvidia dominated headlines after CEO Jensen Huang resigned and Colette Kress stepped in as interim chief, following a board meeting to discuss his possible removal. CoreWeave's strong results lifted chip stocks, AMD received upgrades from Oppenheimer and William Blair, and Costco traded in record territory after announcing a special cash dividend and a fresh buyback program.
Cisco and Applied Materials both beat estimates and both sold off, while CoreWeave, Rocket Lab and Constellation Energy were rewarded during the week. Cisco posted fiscal first-quarter revenue of 18.50B versus 18.11B expected, and its stock was down 6.50% on Friday. Applied Materials reported EPS of 4.16 versus 4.06 expected and its shares were down 3.39%.
US stocks fell Friday as a sell-off in chip stocks picked up, with the Dow down 0.2%, the S&P 500 down 0.9% and the Nasdaq Composite down 1.6%. Wholesale inflation rose 0.3% month over month in October per the producer price index, less than the 0.4% economists expected. The 10-year Treasury yield reached as high as 5.17% and bitcoin tumbled below $70,000.
A rebound in artificial intelligence stocks lifted the US market, with the S&P 500 rising 1.3% and pulling within 2.6% of its all-time high set last month. The Nasdaq composite rallied 1.6% and the Dow Jones Industrial Average added 254 points, or 0.5%. CoreWeave leaped 24.7% after showing it lost less money during the summer than analysts expected, and CEO Michael Intrator said the company has roughly $9 billion in customer prepayments and deposits expected in the next three months.
Chicago Fed President Goolsbee said inflation has been well above target and that it is worth being "sober minded" about inflation and the Fed's response, adding that AI investment looks like a form of stimulus. He noted the market is pricing in 87 basis points of hikes in the year ahead. October headline prices rose 0.4% and core prices rose 0.3% for a third straight month, while Fed Governor Waller said he would consider voting for 50 basis points in December and Dallas Fed President Logan wants at least two more hikes.
The policy-sensitive 2-year Treasury yield surged 38.8 basis points over four trading sessions to 4.862% on Thursday, the biggest four-session climb since June 15, 2022. The jump followed the US midterm elections, hot October inflation and labor-market reports, and Fed Governor Chris Waller's suggestion Tuesday that a half-percentage-point hike might be warranted in December. Traders were pricing a higher terminal policy rate of 4.82%, versus 4.44% a few days ago, after the Fed raised rates in September to a range of 3.75% to 4%.
Nvidia shares tumbled 7% after the New York Times reported that CEO Jensen Huang had an affair with one of Nvidia's vice presidents who reports directly to him, following reports about a relationship with an alleged operative recruited by the Chinese government. The Wall Street Journal reported that Nvidia's board is being scrambled to decide whether Huang would be ousted for workplace misconduct, and the probability of his departure before 2026-end on prediction market Kalshi spiked from 20% to over 50%. Earlier in the session the S&P 500 rose 1.3% and the Nasdaq Composite rose 1.6%.
Ludovic Subran, chief investment officer and chief economist at Allianz, said he was not surprised by the latest US inflation print and that markets are underestimating a second inflation shock. He pointed to energy pass-through including diesel refining, food inflation and AI-related inflation, and said markets are now pricing three Fed hikes. Chicago Fed President Austan Goolsbee called the report "distressing" and said officials will have to deal with price pressures.
A rebound in artificial-intelligence stocks lifted the US market on Wednesday, with the S&P 500 up 0.9% and the Nasdaq composite up 1.4%, while the Dow Jones Industrial Average was down 56 points, or 0.1%, as of 9:35 a.m. Eastern time. CoreWeave, which rents out access to AI chips over the cloud, leaped 10.7% after reporting a smaller quarterly loss than analysts expected. CEO Michael Intrator said the company has roughly $9 billion in customer prepayments and deposits expected in the next three months, which some analysts said showed progress toward being able to self-fund its business.
Artificial intelligence infrastructure stocks rallied after CoreWeave eased fears about its debt-laden business, with CoreWeave up as much as 20%, Nebius up 15%, IREN up 4.7%, Cipher Digital up 6.0%, Applied Digital up 4.8%, Hut 8 up 1.8% and Oracle up 6.4%. Fossil Group surged after reporting better-than-expected third-quarter results, with adjusted earnings of 23 cents per share versus expectations for a loss of 4 cents, revenue of $271.2 million against a $248.66 million consensus estimate, and a raised 2026 sales forecast. Mosaic fell as much as 2.6% after Freedom Capital Markets lowered its rating on the fertilizer firm to sell from hold on higher costs.
The consumer price index rose 0.4% in October from September, more than a Dow Jones consensus estimate of a 0.3% increase. CME Group's FedWatch tool shows an 11% chance of a 50 basis-point hike in December, up from zero a week ago, and expectations for a quarter-point increase stand at 88%, up from 77%. The benchmark 10-year Treasury yield rose nearly 10 basis points to 4.95%.
Goldman Sachs now expects 25 basis-point Fed hikes in December 2026 and March 2027, adding a third hike to the cycle after a third straight month of hot inflation, and has pushed its first rate cut to December 2027. The bank says the March move could come in January but March is slightly more likely, and it expects most FOMC members to signal a third hike in the December dot plot. It still sees inflation meaningfully lower by end-2027 as tariff, energy and AI pressures fade.
