Stocks Fall As Inflation Data Chills Rate-Cut Excitement, Chipmakers, Solar Sector Soar On Harris-Linked Boost: What's Driving Markets Wednesday?

Wall Street witnessed a broad sell-off on Wednesday, except for the tech sector, as investor optimism over disinflation progress cooled following a mixed August inflation report.

The Consumer Price Index (CPI) rose 2.5% year-over-year, slightly below the 2.6% estimate and down from July’s 2.9%, marking the slowest pace of inflation since February 2021. The bulk of this decline came from energy-related categories.

However, core inflation — excluding the more volatile components like food and energy — rose 0.3% month-over-month, surpassing expectations of 0.2%. The annual core CPI remained at 3.2%, reflecting persistent inflation in service-related sectors.

A key driver of inflation continues to be shelter costs, which rose 0.5% from the previous month—the sharpest increase since January — and account for nearly a third of the total CPI.

The report dashed hopes for a Federal Reserve rate cut in the upcoming meeting. Market expectations for a 50-basis-point cut plummeted to just 13%, down from 34% the day before, as per CME FedWatch.

The inflation data gave the U.S. dollar a lift and nudged Treasury yields higher across the board. Sectors most sensitive to interest rates, such as real estate, materials and financials, led the sell-off.

In contrast, tech stocks defied the broader market slump, driven by strong gains in the semiconductor space.

Nvidia Corp. NVDA surged 4.5%, buoyed by the market's reaction to the latest U.S. presidential debate between Vice President Kamala Harris and former President Donald Trump.

The two candidates engaged in a back-and-forth about tariffs on goods, which would impact inflation and the chipmaking industry.

Solar stocks also rallied, with the Invesco Solar ETF TAN jumping over 4%, as the prospect of a Harris administration increased optimism for renewable energy policies. First Solar Inc. FSLR was the top performer within the industry, jumping over 12%.

Elsewhere, gold remained flat, while oil prices rebounded over 2% after Tuesday’s sell-off. Bitcoin BTC/USD dropped more than 2%.

Wednesday’s Performance In Major US Indices, ETFs

Major Indices	Price	1-day %chg
Nasdaq 100	18,865.96	0.2%
S&P 500	5,476.37	-0.3%
Russell 2000	2,092.21	-0.5%
Dow Jones	40,436.47	-0.7%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY was 0.3% lower to $547.10.
• The SPDR Dow Jones Industrial Average DIA fell 0.7% to $405.59.
• The tech-heavy Invesco QQQ Trust Series QQQ inched 0.2% higher to $459.93.
• The iShares Russell 2000 ETF IWM fell 0.4% to $207.30.
• The Technology Select Sector SPDR Fund XLK outperformed, up 0.9%. The Financials Select Sector SPDR Fund XLF was the laggard, down 1.4%.

Wednesday’s Stock Movers

• Lithium-related stocks surged on Wednesday after reports of production disruptions in China sent the price of the commodity climbing. Albemarle Corp. ALB, one of the world’s largest lithium producers, rallied 9.7% on the news.
• AppLovin Corporation APP surged 8.6% to $93.63 after Bank of America analyst Omar Dessouky reiterated a Buy rating and raised the price target from $100 to $120.
• Lucid Group Inc. LCID rallied 8.1% amid bullish remarks from Bank of America analyst John Murphy, CFA who expects the Gravity SUV to get a large total addressable market.
• GameStop Corp. GME tanked 13.8% as revenue missed expectations last quarter.
• Trump Media & Technology Group Corp. DJT plummeted 12.8% in reaction to the presidential debate.

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