Global Tech Rout Deepens on Inflation Jolt and AI Financing Fears; Treasuries Surge as Growth Scare Emerges

A rout in technology stocks accelerated across Asia on Thursday before stabilizing in Europe and the United States, as investors grappled with a potent mix of hotter-than-expected U.S. inflation and deepening concerns over the debt-fueled financing behind the artificial-intelligence buildout.

The selling pressure, which began Wednesday after U.S. consumer price data put a Federal Reserve rate hike back on the table, spread rapidly to Asia. South Korea’s KOSPI benchmark crashed into a bear market, losing 20% of its value in barely a week and triggering circuit breakers, according to reports. Japan’s Nikkei slid 5%. The moves followed a 1.9% drop in the Nasdaq on Wednesday — its biggest fall in three months — and a 4.2% plunge in the Philadelphia Semiconductor Index (SOX), its sixth straight decline.

By Thursday afternoon in New York, the selling had eased. The Nasdaq edged up 0.1%, the S&P 500 rose 0.3%, and the Dow Jones Industrial Average gained 1% to a one-month high. Chip stocks fell for a seventh day, their longest losing streak in four years, according to Reuters.

**U.S. Treasuries Rally as Growth Fears Replace Rate Fears**

In a sharp reversal of the prior day’s move, U.S. government bonds rallied strongly. The 10-year Treasury yield tumbled 10 basis points to 5.08%, its lowest since Sept. 23, according to reports. The move came despite data showing U.S. producer prices posted their largest gain in 4-1/2 years, reinforcing the inflation picture.

“Thursday was one of the best days of the year for Treasuries, especially for maturities of 10 years and beyond,” Reuters reported, noting that the rally showed the safe-haven appeal of U.S. debt remained intact. The odds of an October Fed rate hike slid back to around 30% from a post-CPI intraday peak of 58%, according to Zerohedge.

The dollar fell broadly, with the Bloomberg Dollar Spot Index down 0.3%-0.4% in its biggest decline in six weeks, Reuters reported. The Swiss franc led G10 gains, while the Brazilian real slumped.

**AI Credit Distress Deepens**

The heart of the selloff remains the debt markets financing the AI infrastructure boom. CoreWeave’s 2032 bonds, issued just four months ago, fell below 80 cents on the dollar — a level typically considered distressed — Reuters reported. CoreWeave’s 9.75% bond maturing in 2031 yielded 16% on Wednesday and slumped to a new low, according to the earlier Reuters report.

The cost of insuring against default by major U.S. AI firms soared to a record high, Reuters reported. “Borrowing costs and spreads are spiraling higher, which deepens investors’ concerns, risking further selling and intensifying the negative feedback loop,” the newswire said.

In premarket trading Thursday, CoreWeave shares fell another 6-7% after imploding 15% the prior day, according to Zerohedge. Dell, Micron, Marvell, and AMD all slid 3-4%.

**Anthropic, Gartner Warnings Add to Gloom**

Adding to the negative sentiment, Anthropic disclosed third-quarter revenue of $16.8 billion, which implied slowing growth, according to Zerohedge. The disclosure came during a pre-IPO investor event that failed to impress, the outlet reported.

A report from Gartner, cited by Zerohedge, warned that $3.5 trillion of AI infrastructure spending could be exposed to impairment by 2030.

Even strong results from Taiwan Semiconductor Manufacturing Co. (TSMC) failed to calm markets. TSMC guided fourth-quarter revenue of $52.3-54.3 billion, above the street estimate of about $50 billion, according to Zerohedge. The SOX index remained down 12% over the past six sessions. Goldman Sachs had warned of a semiconductor “air pocket” last week, Zerohedge reported.

**Rotation Underway**

The turbulence is prompting a rotation out of technology. Eight of 11 S&P 500 sectors fell Wednesday, with tech down 2.6% while healthcare and consumer staples gained 2.4%, Reuters reported. On Thursday, healthcare rose 2% while tech slipped 0.5%.

According to Deutsche Bank, cited by Reuters, since mid-2024 the average length of rotations out of tech is 67 days, with a median drawdown of 14.6%.

**Broader Context: Government Stakes, China Surplus**

The rout comes amid growing scrutiny of the financial underpinnings of the AI industry. Reuters reported that the U.S. government has done 35 equity-stake deals since June 2025, including 11 in semiconductor companies and 9 in quantum computing firms, raising the prospect of eventual government stakes in major AI players.

Separately, China’s trade surplus widened more than expected in September, putting the country on track for another $1 trillion annual surplus, with AI-related semiconductor and green-tech exports a central driver, Reuters reported. The International Monetary Fund called for the U.S. to cut deficits and urged China to shift away from export-led growth.

**Looking Ahead**

Investor attention now turns to the U.S. earnings season, with tech companies facing a high bar. “If it is not hurdled, investors may decide to ramp up the rotation into other sectors,” Reuters noted. Key events include speeches by Fed Chair Kevin Warsh, ECB President Christine Lagarde, and Bank of England Governor Andrew Bailey, as well as U.S. retail sales and industrial production data due Friday.

The risk of a self-fulfilling “doom loop” in credit markets remains, Reuters warned. “We’re not at crisis point yet — look at the rebound in U.S.