TLDR
- Wednesday saw the Nasdaq plunge 1.9% and the S&P 500 decline 1.1%, marking their steepest losses since late July.
- IREN, Cipher Mining, Core Scientific, and TeraWulf all tumbled more than 12%.
- September consumer prices climbed 3.7% year-over-year, exceeding the 3.6% forecast.
- Following the inflation release, the probability of a Federal Reserve rate increase in October momentarily exceeded 50%.
- Mary Daly of the San Francisco Fed indicated additional rate increases may be necessary but emphasized no immediate action is required this month.
Wall Street experienced its most severe session since late July on Wednesday following an inflation reading that came in hotter than analysts anticipated. Shares of technology companies and AI infrastructure operators bore the brunt of the selloff, with Bitcoin mining firms suffering particularly steep declines.
The S&P 500 declined 1.1%, representing its most significant single-session retreat since July 29. The Nasdaq Composite tumbled 1.9%, marking its sharpest daily loss since July 23.
The Dow Jones Industrial Average proved more resilient, edging down only 0.1% by the closing bell.
Data Center and AI Companies Bear Brunt of Selloff
CoreWeave, a data center operator, ranked among the day’s worst performers in the technology space, plummeting 16%. AI infrastructure company Nebius declined 11%, and Oracle shed 9%.
The weakness extended throughout the industry. Among the 23 equities monitored by PRISM’s AI Data Center and Infrastructure Index, 21 closed lower Wednesday.
The index recorded an average decline of 7.46%.
Numerous AI infrastructure firms depend significantly on borrowed capital to finance new data center construction. Elevated interest rates could substantially increase their financing expenses.
Cryptocurrency Mining Equities Sink Over 12%
Bitcoin mining companies felt the pressure as well. A number of these firms have recently diversified into AI infrastructure operations.
TeraWulf posted the steepest decline among mining stocks, dropping 12.64%. Core Scientific retreated 12.44%, Cipher Mining slid 12.35%, and IREN declined 12.2%.
Additional mining operators finished in negative territory. Riot Platforms, Bitdeer Technologies, MARA, and CleanSpark all recorded losses.
Bitcoin faced downward pressure alongside mining equities. The cryptocurrency slipped beneath $82,000 as elevated oil prices contributed to inflationary pressures.
US consumer prices advanced 3.7% in September on a year-over-year basis. The consensus forecast among economists had called for a 3.6% gain.
This reading remains substantially above the Federal Reserve’s 2% inflation objective. Rising gasoline costs tied to Middle Eastern conflict drove much of the increase.
The data sparked heightened speculation that the Fed might implement a rate increase in October. The market-implied likelihood of such a move temporarily surpassed 50% Wednesday before retreating.
Mary Daly, President of the San Francisco Federal Reserve, adopted a more measured stance. She informed Reuters that while additional rate increases will probably be necessary to control inflation, immediate action this month isn’t critical.
“I don’t feel urgent that we have to decide with a limited set of information. I think we have the time that we need,” Daly stated.
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