The Nasdaq neared a one-month low on Thursday as a deepening selloff in AI-linked shares reflected mounting concerns that higher interest rates could constrain investment in the capital-intensive technology. Fresh evidence of broadening US inflation added to the pressure, Reuters reported.

Meanwhile, the Dow Jones Industrial Average rose 163.58 points, or 0.32%, to 51,785.06. The S&P 500 fell 32.20 points, or 0.42%, to 7,686.74, while the Nasdaq Composite lost 283.07 points, or 1.06%, to 26,409.80.

The S&P 500 and Nasdaq recorded their biggest one-day declines since July on Wednesday after hotter-than-expected consumer inflation data strengthened expectations of further Federal Reserve rate hikes and hit technology shares.

Sentiment weakened further after TSMC struck a cautious tone on its 2027 outlook, citing macroeconomic uncertainty. A reported 45% quarter-on-quarter increase in third-quarter revenue at AI company Anthropic failed to reassure investors.

CoreWeave, the heavily indebted data-centre operator at the centre of the recent selloff, tumbled 8.5% after dropping 15% on Wednesday. Oracle edged lower following a nearly 9% decline in the previous session. Bonds issued by both companies also fell, pushing their yields to record highs.

Chipmakers extended their losses. Nvidia dropped 3.3%, Micron Technology fell 5% and Advanced Micro Devices slid 6.4%.

If the losses held, the broader semiconductor index would have erased about $2 trillion in market value during a decline of more than 14% over seven sessions. That would mark its longest losing streak since May 2025.

Information technology was the S&P 500’s worst-performing sector, falling 2%. The selloff drove demand for government bonds, pushing the benchmark 10-year US Treasury yield to a three-week low of 5.0725%.

“Investors are increasingly questioning how much future growth is already priced into valuations, how expansion is being financed and when these investments will generate sufficient returns,” Charu Chanana, chief investment strategist at Saxo, said in a note, according to Reuters.

“The repricing of CoreWeave’s debt suggests that investors are becoming less willing to finance AI infrastructure growth at any cost,” Chanana added.

The CBOE Volatility Index, Wall Street’s fear gauge, touched a two-week high and was last up 0.83 points at 17.74.

Investors rotated into traditionally defensive sectors, with healthcare and consumer staples rising more than 2% each. Gains in those sectors helped support the Dow.

The Nasdaq had fallen more than 4% from the record high it reached last week. Concerns about borrowing costs and AI spending threatened to overshadow the third-quarter earnings season, during which S&P 500 profits were expected to grow 30.6%, according to LSEG data.

US producer prices recorded their biggest increase in 4½ years in September as the cost of goods and services rose, offering further evidence that inflation was spreading beyond energy.

Investors awaited Federal Reserve Chair Kevin Warsh’s speech at the International Monetary Fund’s annual meeting.

Among individual stocks, Rocket Lab plunged 15% after delaying the first launch of its larger Neutron rocket until next year.

FMC sank more than 38% after the agricultural-chemicals company sharply lowered its third-quarter outlook and estimated a $625 million-$675 million impact from commercial actions.

Advancing stocks outnumbered declining issues by 1.78 to 1 on the New York Stock Exchange and by 1.05 to 1 on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and no new lows, while the Nasdaq Composite recorded 29 new highs and 261 new lows.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)