US Stock Market: Why have S&P 500, Dow Jones, Nasdaq suffered worst day since July at Wall Street?

US Stock Market indexes suffered their worst day at the Wall Street since July. On Wednesday, S&P 500 fell 86.51 points, or 1.1 per cent, to 7,718.94, Dow Jones Industrial Average dropped 48.62 points, or 0.1 per cent, to 51,621.48, Nasdaq composite slipped 511.51 points, or 1.9 per cent, to 26,692.87, Russell 2000 index of smaller companies was down 53.84 points, or 1.9 per cent, to 2,729.53.

A report showing inflation accelerated last month raised expectations on Wall Street that the Federal Reserve will raise interest rates. More expensive borrowing could slow the buildout of AI data centers, and AI stocks were the heaviest weights on the market. Bank of America sank after reporting a weaker profit than analysts expected.

US Stock Market Down


S&P 500 had its fifth loss in the six days since setting its all-time high. Nasdaq composite slid as stocks in the artificial-intelligence industry led the way lower. Smaller companies also feel the bite of higher interest rates because many need to borrow to grow which had impact on Russell 2000 index.

Much of Wall Street’s pain on Wednesday was due to drops for companies riding the AI frenzy to huge profit growth and stellar stock gains.

Higher bond yields making borrowing money more expensive could make it more difficult for companies to raise cash to build data centers and fill them with AI chips. Drops of 3.2 per cent for Nvidia, 3.1 per cent for Broadcom and 5.7 per cent for Advanced Micro Devices were among the day’s heaviest weights on the S&P 500.

CoreWeave, which offers AI computing power to customers over the cloud, tumbled 15.5 per cent for its worst day since February. GE Vernova, which is hoping to electrify power-hungry data centers, dropped 6.2 per cent, and Oracle sank 8.8 per cent.

US Bond Market Impact on Wall Street

Stocks felt pressure from rising yields in the bond market, where worries grew after a report said U.S. consumers had to pay prices for fuel, food and other costs of living last month that were 3.7 per cent higher overall than a year earlier. That means inflation accelerated from its 3.4 per cent rate in August and was worse than the 3.6 per cent that economists expected.

Higher yields in the bond market push downward on prices for all kinds of stocks, and the main way companies can offset that is by delivering bigger profits. That’s exactly what analysts are expecting, and it’s how the S&P 500 has been able to set records despite the many challenges weighing on Wall Street.

But the high expectations also mean companies will likely get punished if they fall short of targets for growth.

Bank of America dropped 4.8 per cent after reporting weaker profit and revenue for the summer than analysts expected. The profit would have failed to meet expectations even if the U.S. Treasury Department had not announced $1.2 billion in fines late Tuesday for alleged violations of anti-money laundering and sanctions laws by the bank.

State Street sank 4.1 per cent after reporting weaker revenue for the latest quarter than analysts expected, even though its profit was slightly above their forecasts.