Stocks posted their steepest single-day decline since July on Thursday. A stronger-than-expected inflation reading reignited fears of another rate hike. Renewed doubts about artificial intelligence stocks deepened the selloff.
The latest consumer price data came in above forecasts. That report quickly shifted market expectations toward a possible October rate increase. Investors had largely priced in a pause before the numbers arrived.
Rate-sensitive sectors led the early drop. Technology and growth shares felt the most pressure. Bond yields climbed as traders adjusted their positions.
Attention then turned to the AI sector, which has driven much of this year’s market gains. Several major AI-linked companies saw sharp reversals. The pullback suggested growing unease about stretched valuations.
Analysts pointed to a mix of profit-taking and repositioning. Some investors questioned whether AI revenue can meet lofty projections. Others cited broader economic uncertainty ahead of the next Federal Reserve meeting.
The selloff was broad but not uniform. Defensive stocks held up better than the wider market. Energy shares also avoided the worst losses as oil prices firmed.
Thursday’s session erased weeks of gains for major indexes. The Nasdaq bore the brunt of the decline. The S&P 500 and Dow also closed sharply lower.
Markets now await further economic data and Fed commentary. Volatility could persist if inflation stays firm. The AI trade remains a key swing factor for investor sentiment.
