Hotter-than-expected US inflation data sent the Nasdaq to a sharply lower close on Wednesday, with worries about more interest rate hikes from the US Federal Reserve pummeling shares ⁠of Oracle, CoreWeave and other AI stocks sensitive to higher borrowing costs. Increased bets that the Fed will need more rate hikes to tame inflation dealt a sharp blow to some of the market's biggest gainers of 2026. Oracle lost 8.8 percent, while AI-infrastructure firms CoreWeave and Nebius tumbled 15 percent and 10 percent, respectively. Dell and Hewlett Packard Enterprise sank 11.4 percent and 8.2 percent respectively, after Barclays downgraded the AI server makers to "equal-weight" from "overweight". The Philadelphia SE Semiconductor Index dropped 4.3 percent, down for a sixth straight session, its longest losing streak since May 2025. Apple rose 0.5 percent, with its market capitalisation closing above US$5 trillion for the first time. US Labor Department data showed the core consumer price index up 0.3 percent in September versus economist expectations for a rise of 0.2 percent. On an annual basis, core CPI, which strips out food and energy prices, rose 2.6 percent, above forecasts for a rise of 2.5 percent, while the headline rate rose 3.7 percent, above estimates for a rise of 3.6 percent. Interest-rate traders are pricing in a ⁠37 percent chance that Fed policymakers will raise ⁠rates this month, up from 22 percent on Tuesday, according to CME's FedWatch tool. "Investors are not happy with the report because that puts pressure on the Fed to raise rates to combat inflation," said Adam Sarhan, chief ⁠executive of 50 Park Investments, in New York. Inflation remains public enemy number one for the market and for the Fed." The S&P 500 declined 1.1 percent to end the session at 7,718 points, its biggest one-day drop since July 29. The Nasdaq declined 1.9 percent to 26,692 points, its biggest daily drop since July 23. The Dow Jones Industrial Average declined 0.1 percent to 51,621 points. Bank of America fell 4.8 percent. The lender's profit fell in the third quarter as it set aside US$1.2 billion to cover regulatory fines for failures to detect potential money laundering. Morgan Stanley dropped almost ⁠3 percent, despite a rise in quarterly profit. (Reuters) Edited by Cecil Wong