Key takeaways
- Nasdaq remains nearly 11% below October record
- November 10 inflation report tests Fed rate expectations
- AI stocks face mounting pressure from borrowing costs
The US stock market faces another major test on November 10 as fresh inflation figures threaten to deepen the Nasdaq Composite's correction following a sharp selloff in artificial intelligence stocks.
According to the Bureau of Labor Statistics, October's Consumer Price Index will be released Tuesday at 8:30 a.m. Eastern Time, giving investors their latest indication of whether inflation is slowing enough to ease pressure on the Federal Reserve.
The report arrives after the Nasdaq fell into correction territory, losing more than 10% from its October record as investors questioned whether enormous AI infrastructure investments could generate sufficient returns.
Nasdaq Remains in Correction Despite Friday's Rebound
The Nasdaq Composite closed November 6 at 24,579.42, recovering 1.1% following Thursday's 5.5% collapse.
However, the technology-heavy index still lost 3.4% during the week and remained approximately 10.9% below its October 6 record of 27,599.89.
The latest technology selloff reflected growing concerns about AI spending, infrastructure financing and possible restrictions on data center construction.
Semiconductor stocks suffered particularly severe losses.
Nvidia shares plunged 9.26% on November 5, while AMD declined approximately 17.3%.
Although both recovered some ground Friday, the rebound failed to erase the broader market's losses.
US Inflation Could Reinforce December Fed Rate Hike Bets
The inflation report could add another source of pressure to technology stocks already struggling with elevated valuations.
October employment figures showed that the US economy added 165,000 jobs, exceeding expectations, while unemployment remained relatively low at 4.1%.
The stronger labor market increased expectations of another Federal Reserve interest-rate increase in December.
Market-implied probabilities of a quarter-point hike approached 80% following Friday's employment report, according to the latest inflation outlook.
Economists expect core consumer prices to rise approximately 0.3% month over month in October.
Higher-than-expected inflation could reinforce expectations of tighter monetary policy, potentially raising borrowing costs and putting additional pressure on growth-oriented technology stocks.
Conversely, cooler inflation could reduce expectations of aggressive tightening and support a market recovery.
AI Infrastructure Debt Adds to Wall Street's Vulnerability
Higher interest rates would arrive at a difficult moment for companies financing expensive AI data center projects.
Investors have already begun reassessing the valuation premium attached to semiconductor companies, even as chipmakers continue reporting substantial revenue growth.
Credit markets have also signaled growing concern.
CoreWeave's default protection costs recently exceeded 1,200 basis points, highlighting the cost of insuring debt exposed to AI infrastructure risks.
The International Monetary Fund has separately warned that a sharp slowdown in AI investment could weaken economic growth and complicate monetary policy.
