US stocks face pressure from inflation, AI financing fears and mixed bank earnings

US markets opened October under pressure as hotter-than-expected inflation, rising rate expectations and questions over AI spending weighed on technology shares. Mixed third-quarter results from major banks and strong asset-management inflows added to the split picture for Wall Street.

Why it matters: - Higher inflation is making a near-term Federal Reserve rate cut less likely and raising the cost of capital across markets. - That hits growth stocks hardest, especially technology companies funding large AI buildouts with debt or outside financing. - Mixed bank earnings and stronger asset-management results show investors are rewarding balance-sheet strength and recurring fee income over headline revenue growth.

What happened: - US stock futures diverged in early October trading as investors digested a 3.7% September inflation reading, AI financing concerns and mixed third-quarter bank earnings. - Nasdaq 100 futures fell 380.25 points, or 1.26%, and S&P 500 futures dropped 27.5 points, or 0.35%. - Dow Jones futures gained 202 points, or 0.39%. - The prior session also weakened: the S&P 500 fell 1.11% to 7,718.94, the Nasdaq Composite lost 1.88% to 26,692.87, the Dow slipped 0.09% to 51,621.48 and the Russell 2000 fell 1.9%. - The S&P 500 remained up 12.8% year to date, while the Nasdaq was up 14.8%.

The details: - September CPI rose 3.7% from a year earlier, above the 3.6% forecast and August's 3.4% pace. - Monthly inflation accelerated to 0.6% from 0.4% in August. - Gasoline prices rose 9.1% in September and accounted for more than half of the monthly headline inflation gain. - The broader energy index climbed 5.2% month over month and 20.4% year over year. - Core inflation, excluding food and energy, rose 2.6% annually from 2.4% and topped the 2.5% consensus. - Monthly core inflation came in at 0.3%, above the expected 0.2%. - Citi revised its forecast to include a 25-basis-point Federal Reserve rate increase in December. - Futures markets showed a 27% probability of an October rate increase and a 67% probability of a December increase as of early October 15. - Higher rates lift borrowing costs and reduce the present value of future earnings, which weighs most heavily on companies priced for rapid growth.

Between the lines: - Technology shares sold off harder because investors are questioning whether AI infrastructure spending will generate returns fast enough to justify the financing burden. - CoreWeave fell about 15% on October 14 and then another 4.5% in premarket trading on October 15. - Oracle dropped nearly 9% in the prior session and slid another 2% before Thursday's open. - Nvidia fell 1.3% in premarket trading, Micron Technology lost 4% and Advanced Micro Devices declined 1.9%. - The prior day's AI-linked selloff erased about $80 billion in combined market value across several companies tied to the theme. - Taiwan Semiconductor Manufacturing Co. warned about uncertainty in 2027 even as it posted a sixth straight record quarterly profit. - Anthropic reportedly told prospective investors that third-quarter revenue rose 45% from the prior quarter to $16.8 billion, with adjusted profitability. - The split underscores a central valuation debate: revenue growth alone may not be enough if infrastructure spending and financing costs keep rising. - Major banks also sent mixed signals on where profits are coming from. - JPMorgan Chase reported net income of $15.3 billion, up 6% year over year, with diluted earnings of $5.57 per share and revenue of $50.2 billion. - JPMorgan's investment banking fees rose 14% to $3 billion, equities trading revenue jumped 49% and fixed-income trading fell 4%. - Wells Fargo posted net income of $5.95 billion, up 6%, and earnings of $1.87 per share, beating the $1.85 estimate. - Wells Fargo revenue rose 2% to $21.87 billion, below the $22.31 billion forecast, while net interest income climbed about 5% to $12.52 billion. - Wells Fargo's average loans and deposits each increased 11%, and return on tangible common equity improved to 16.3%. - Citigroup reported net income of $5.25 billion and earnings of $2.85 per share, with revenue up 8% to $23.85 billion. - Citigroup's Services revenue grew 15% and Markets revenue rose 6%. - Bank of America reported revenue growth of 3% to about $30 billion, but net income fell to $6.9 billion from $8.3 billion after a $1.2 billion regulatory settlement charge. - Bank of America's adjusted earnings were $1.08 per share, net interest income rose 8% to $16.4 billion, fixed-income trading revenue fell 17% and unrealized securities losses widened to $109 billion from $85 billion at the end of June. - Morgan Stanley reported about $20.3 billion in revenue and earnings of $3.03 per share, both above expectations. - BlackRock reported adjusted earnings of $15.93 per share, up 38% year over year, and revenue of about $7.8 billion, up 19%. - BlackRock's assets under management reached $15.49 trillion, and the firm drew $205 billion in net inflows, including $134.5 billion into iShares ETFs and $78.2 billion into fixed-income products.

What's next: - Markets will stay focused on whether the inflation data pushes the Federal Reserve toward another hike and keeps policy restrictive for longer. - Investors are likely to keep pressuring AI-linked stocks until companies show clearer paths from spending to cash flow and profit. - Bank trading, deposit costs and regulatory charges will remain key gauges of whether the sector can sustain earnings into year-end. - Asset managers could continue to benefit if market volatility drives demand for professionally managed products and fixed-income exposure.

The bottom line: - Wall Street is shifting from broad risk-taking to a more selective market where inflation, financing costs and earnings quality matter more than growth narratives alone.