The S&P 500 fell 31.53 points, or 0.42%, to 7,560.87 and the Nasdaq lost 230.13 points, or 0.91%, to 25,135.96, while the Dow rose 46.14 points, or 0.09%, to 52,343.23.
BofA Global Research added a 25-basis-point Fed hike in January 2027 to its forecast after October headline CPI rose 0.4% and core CPI rose 0.3%.
Nvidia fell 5% after CEO Jensen Huang was ousted and Colette Kress became interim CEO, while Super Micro Computer dropped 13% on a reported DOJ probe.
Cerebras Systems surged 18% premarket on strong third-quarter results and a Microsoft partnership, and Modine Manufacturing jumped 22% on a report of Samsung acquisition talks.
AMD fell 9.50% as chip and AI infrastructure stocks led losses after Nebius cut its full-year revenue forecast to $3-3.2bn.
The S&P 500 lost 31.53 points, or 0.42%, to end at 7,560.87 points and the Nasdaq Composite lost 230.13 points, or 0.91%, to 25,135.96, while the Dow Jones Industrial Average rose 46.14 points, or 0.09%, to 52,343.23. Nvidia-related concerns weighed on technology stocks, with the Philadelphia Semiconductor Index falling significantly. The latest inflation data did little to change expectations for further Federal Reserve rate hikes.
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.
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.
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.
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.
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.
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.
Nvidia stock sank 5% as Chief Executive Officer Jensen Huang was ousted, with the board counting on Colette Kress as interim CEO. Super Micro Computer shares fell 13% after Semafor reported that the Department of Justice is probing the company along with Nvidia and Megaspeed. Cisco Systems jumped after the close as its fiscal first quarter showed its strongest revenue and earnings growth in more than 15 years, with adjusted earnings per share of $1.40 versus $1 a year ago and revenue up 24% to $18.52 billion; it raised adjusted EPS guidance to between $5.47 and $5.53 for fiscal 2027 on revenue of $74.8 billion to $75.8 billion.
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.
Goldman Sachs now expects the Federal Reserve to raise its benchmark rate by 25 basis points in March 2027, in addition to a quarter-point increase it already forecasts for December, which would lift the federal funds target range from 3.75–4 percent to 4.25–4.50 percent. The revision followed October consumer inflation data that marked a third consecutive month of upside surprises, with core CPI up 0.3 percent. David Mericle, Chief U.S. Economist at Goldman Sachs Research, said a third increase is more likely in March than January.
