U.S. stock futures fall as hot inflation revives Fed hike concerns

Investing.com-- U.S. stock futures fell on Wednesday evening as investors assessed the prospect of further Federal Reserve tightening following hotter-than-expected inflation data, while looking ahead to more corporate earnings and economic releases.

S&P 500 Futures inched 0.3% lower to 7,747.50 points, while Nasdaq 100 Futures fell 0.8% to 29,943.00 points by 20:20 ET (00:20 GMT). Dow Jones Futures traded flat at 51,866.0 points.

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The declines followed a broad sell-off on Wall Street, where technology and artificial intelligence-related shares came under pressure as rising borrowing costs threatened to undermine valuations.

The NASDAQ Composite fell 1.9%, the S&P 500 lost 1.1%, and the Dow Jones Industrial Average slipped 0.1%.

The U.S. Labor Department reported that the Consumer Price Index rose 3.7% year-on-year in September, accelerating from 3.4% in August and exceeding economists' expectations for a 3.6% increase.

Core inflation, which excludes food and energy, climbed 2.6% annually, above forecasts for 2.5%, while monthly core prices increased 0.3%, against expectations for 0.2%.

Gasoline prices surged 9.1% during the month, accounting for more than half of the overall monthly increase in consumer prices. However, gains in shelter and other categories also pointed to broader inflationary pressures, complicating the outlook for monetary policy.

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The data strengthened expectations that the Federal Reserve could raise interest rates again at its October 27-28 meeting. The central bank raised its policy rate to a range of 3.75%-4.00% in September, and investors had previously expected policymakers to leave rates unchanged this month.

Treasury yields initially jumped after the inflation report, while the dollar strengthened. Although yields later retreated from their session highs, tighter financial conditions continued to weigh on equities, particularly technology companies whose valuations are sensitive to interest rates.

Artificial intelligence-linked stocks were among the biggest losers. Data centre operator CoreWeave Inc (NASDAQ:CRWV) fell 16%, AI infrastructure company Nebius (NASDAQ:NBIS) dropped 11%, Oracle (NYSE:ORCL) declined 9%, and Dell Technologies (NYSE:DELL) slid 11%.

The sell-off reflected concerns about financing costs and elevated valuations after a strong rally in AI-related shares.

Investors will turn to Thursday's U.S. producer price index and retail sales reports for further clues about inflation and consumer demand.

The figures could influence expectations for the Fed's next policy decision, while the ongoing third-quarter earnings season will provide insight into corporate resilience amid higher costs and borrowing rates.

Markets are also monitoring developments in the Middle East, where the conflict involving Iran has pushed energy prices higher.

Oil prices ticked lower in Asian trading Thursday, but remained elevated with Brent holding above $105 per barrel.

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