Wall Street falls as hot CPI fuels Fed rate hike bets

U.S. stocks closed lower Wednesday as hotter-than-expected inflation data fueled expectations for further Federal Reserve rate hikes, pressuring technology and other rate-sensitive investments. The Nasdaq Composite fell 1.85%, while the S&P 500 dropped 1.08%. The September consumer price index rose 0.6% month-over-month, with annual inflation accelerating to 3.7%, above economist forecasts. Core CPI also exceeded expectations. Market participants priced a 32.7% probability of an October rate hike, up from 22% Tuesday. Technology stocks led declines, with Oracle down about 9% and CoreWeave falling over 16% amid AI financing concerns. Bank stocks also fell after quarterly results, with Bank of America dropping 5% on revenue miss and regulatory penalties. The S&P 500 remains up over 12% in 2026 despite Wednesday's decline, though the median stock has gained only 4% this year.