US$80B AI Selloff After 3.7% US Inflation Print
Hot US inflation triggered a US$80 billion AI selloff and pushed 5-year yields to their highest since 2007.
01/11Photo: CC0 via OpenverseAI stocks selloff after hot US inflation print September CPI rose 3.7% year-on-year, the fastest in five months; Asian equity futures fell for a fourth straight day. - 02/11
US inflation hits fastest pace in five months ✓US CPI year-on-year, September 3.7% Up 0.6% from August, driven by rising fuel costs after Middle East hostilities pushed Brent above US$106. - 03/11VS
S&P 500 index Near all-time highs Median S&P 500 stock ~17% below its peak The index is up, the median stock is not Nvidia, Apple and Microsoft make up over 21% of the S&P 500; the other 497 stocks tell a different story. - 04/11
Four AI names lost US$80B in one session Monthly statement CoreWeave -16% Nebius -11% Oracle -9% Dell Technologies -11% Combined market value erased ~US$80B CoreWeave, Nebius, Oracle and Dell all fell on the day after the inflation print. - 05/11
Bond yields jump to multi-year highs 5-yr 5.15%, first time since 2007 10-yr 5.19% at close 30-yr 5.63% intraday Dollar Highest in over a year Fed pricing ~40 bps of hikes by end-Jan
The 5-year yield topped 5.15% for the first time since 2007; markets now price ~40 bps of Fed hikes by end-January. - 06/11
Why AI infrastructure stocks took the hit Higher borrowing costs squeeze companies that fund data-centre buildouts with debt. CoreWeave's June bond, issued at 9.625%, recently traded at 15%. - 07/11
US tech ETF and index-fund holders Asian equity traders (4th day down) Fuel-cost watchers (Brent > US$106) Corporate bond investors (CCC spreads > 1,000 bps)
Who feels this in their portfolio Asian futures for Japan, Korea and Australia fell for a fourth straight day; Brent sits above US$106. 
08/11Photo: CC0 via OpenverseThe buildout behind the selloff Tech infrastructure capital raising reached US$346 billion year-to-date, double the US$172 billion the prior year. - 09/11
People say “
The S&P 500 is near its all-time high, so the market is broadly healthy. ”The rule says The median S&P 500 stock is about 17% below its peak; 60% of Nasdaq 100 names are in a bear market. All-time-high index does not mean a healthy market Nearly 60% of Nasdaq 100 stocks are down at least 20% from their peaks; the index is propped up by a handful of mega-caps. - 11/11
Three stocks, 21% of the entire S&P 500 The median S&P 500 stock is already about 17% below its all-time high; the index has nowhere to hide if leadership cracks.
Questions people ask
What caused the US$80 billion AI stock selloff?
September US CPI rose 3.7% year-on-year, the fastest in five months. Higher inflation pushed bond yields to multi-year highs, hitting AI infrastructure companies that fund buildouts with expensive debt.
Why did Asian markets fall for a fourth straight day?
Equity-index futures for Japan, South Korea and Australia all declined after the hot US inflation print, tracking the tech-led Wall Street selloff and higher Fed rate-hike expectations.
Is the S&P 500 still at its all-time high?
The index sits near its all-time high, but the median S&P 500 stock is about 17% below its peak and nearly 60% of Nasdaq 100 names are in a bear market. Three stocks carry over 21% of the index.
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