US stocks head into a week of tests after a sharp selloff in AI and tech shares. The Nasdaq Composite closed in correction territory on Thursday, and the October consumer price index report arrives on Tuesday. Investors also expect the Fed to raise rates in December.
US stocks enter the new week on shaky ground, as heavy selling in the AI trade leaves investors uneasy before inflation data and tech earnings. Concerns that Democratic victories in Tuesday's midterm elections would slow the AI data-center buildout drove Thursday's declines, according to Reuters.
Tech leads a sharp Thursday drop
The Nasdaq Composite closed Thursday nearly 12% below its October 6 all-time high, past the 10% threshold that confirms a correction. Tech stocks led a modest rebound on Friday, but the major indexes still posted weekly losses.
All S&P 500 sectors ended lower on Thursday, but the S&P 500 tech sector sank 7.3%. The Philadelphia SE Semiconductor index tumbled over 12%, and both posted their biggest one-day drops in more than six years.
The benchmark S&P 500 is still up nearly 8% in 2026. State Street senior global macro strategist Marvin Loh called the market "a fragile momentum trade".
Inflation data tests December rate-hike bets
On Tuesday, the government will release the monthly consumer price index report, which Reuters calls perhaps the most closely watched inflation measure. Earnings are due from CoreWeave, Applied Materials and Cisco Systems.
Investors expect the Fed to raise rates in December. The central bank held steady last month after hiking in September for the first time in three years.
After a strong jobs report on Friday, Fed fund futures were suggesting a roughly 80% chance of a hike at the December 8 to 9 meeting, according to LSEG data. Investors also expect about two more standard 25-basis-point increases in total for this cycle.
Source: Investing.com (Reuters)
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