Nasdaq falls 1.8% as hot CPI data fuels Fed rate hike fears

U.S. stocks closed lower Wednesday after hotter-than-expected inflation data raised fears of further Federal Reserve rate hikes, with the Nasdaq Composite falling 1.85% and the S&P 500 dropping 1.08%. The September Consumer Price Index rose 0.6% month-over-month and 3.7% annually, both exceeding forecasts, while core CPI also beat expectations. Market pricing for an October rate hike jumped to 32.7%, pressuring rate-sensitive tech and AI infrastructure stocks like Oracle and CoreWeave. Bank shares also declined, with Bank of America falling 5% on weak revenue and Morgan Stanley down nearly 4% despite beating earnings estimates. The S&P 500 remains up over 12% for 2026, though the median stock has gained only 4%.