Tech Stocks Slide as Investors Await Inflation Data and Earnings Stocks fell sharply on Thursday, with the Nasdaq Composite closing nearly 12 % below its October 6 all‑time high, the first time the index has breached the 10 % threshold that signals a correction. The decline followed a modest rebound on Friday, but the major U.S. equity indexes still posted weekly losses. The sell‑off was driven largely by concerns that the Democratic victories in Tuesday’s midterm elections could slow the expansion of data‑center infrastructure that underpins the artificial‑intelligence (AI) boom. Democrats gained control of the U.S. Congress and won several key governorships in data‑center‑heavy states such as Texas. Public backlash over environmental and other concerns about the spread of data centers was a prominent issue in the midterms. The S&P 500 technology sector fell 7.3 %, while the Philadelphia Semiconductor Index (.SOX) dropped more than 12 %, both the largest one‑day declines in over six years. All S&P 500 sectors ended lower on Thursday, with the Cboe Volatility Index (.VIX) reaching a seven‑month high. “It is a fragile momentum trade,” said Marvin Loh, senior global macro strategist at State Street. “You have got this regulatory, political party overhang, which I think is going to stay with us until we really get a sense of how significant of a slowdown we’re thinking about.” Despite the week‑long losses, the S&P 500 remains up nearly 8 % for 2026. Upcoming Market Events Investors will focus on the U.S. Consumer Price Index (CPI) for October, due on Tuesday, which is the most closely watched inflation gauge. The report will test expectations that the Federal Reserve will raise rates in December to curb inflation. The Fed left rates unchanged last month after a September hike, the first in three years. Fed‑fund futures now imply roughly an 80 % chance of a rate hike at the December 8‑9 meeting, according to LSEG data. The CPI release will also provide clues to the Fed’s policy path into 2027, where two additional 25‑basis‑point increases are expected for the current cycle. “If you get a hot number and then you start adding additional tightening because the inflationary environment looks like it’s accelerating, that’s just something else that investors would have to absorb,” Loh said. Tech Earnings to Watch Several technology companies are scheduled to report earnings this week, including CoreWeave (CRWV.O), Applied Materials (AMAT.O), and Cisco Systems (CSCO.O). CoreWeave, a cloud‑computing firm at the center of concerns about financing the AI buildout, has seen its shares decline sharply in recent weeks. “If they do have a little bit more of a cautiously optimistic view in terms of being able to find ways to get projects across the finish line, that I think helps to kind of alleviate some of these concerns,” said Garrett Melson, portfolio strategist at Natixis Investment Managers Solutions. Keith Lerner, chief investment officer at Truist Advisory Services, noted that tech has underperformed the S&P 500 over the past month by its largest amount since May 2002. “We are now seeing something of a buyers’ strike in tech,” Lerner said. The market will also monitor the Cboe Volatility Index and sector performance as investors weigh the implications of the midterm results, the upcoming CPI data, and the earnings reports from key technology firms.
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