October inflation cooled, but not as much as Wall Street expected, and now investors have to take a half-point Fed hike in December more seriously. That could be a problem for an AI trade that already looks wobbly.
Key Points
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Consumer prices rose 0.4% in October, down from 0.6% the month before but above the 0.3% economists expected, and stocks fell anyway.
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With employers adding 165,000 jobs in October and unemployment falling to 4.1%, the Fed has less reason to avoid raising rates, and a half-point hike is now a stronger possibility.
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Sticky inflation and elevated bond yields are pushing up borrowing costs for AI data center companies, and if yields get too high, spending cuts could follow.
