- The S and P 500 fell 1.11% to 7,718.94 and the Nasdaq Composite 1.88% to 26,692.87, while the Dow lost just 48.62 points or 0.09% to 51,621.48, held up by gains in UnitedHealth and Amgen.
- Consumer prices rose 0.6% month over month, in line, but 3.7% year over year against the 3.6% expected. Core CPI rose 0.3% monthly and 2.6% annually, both above forecasts of 0.2% and 2.5%, so the argument that core remains comfortable is weaker than the headline framing suggests.
- The AI complex bore the damage. CoreWeave fell more than 15% and Oracle almost 9% on concerns that technology companies outside the largest names are using too much debt to fund the buildout. Micron dropped 4% after more than 3% the previous day, AMD and Sandisk fell more than 5% and Intel 4%.
- Berkshire Hathaway moved the other way entirely. Class A shares are on track for a tenth consecutive winning day, their first such run since January 2018, after reaching an intraday high of $786,000 on Tuesday and rising more than 5% over the streak, as the $1 trillion conglomerate deploys its cash reserves under Greg Abel.
What Happened?
Gasoline is averaging $4.33 a gallon against about $3.08 a year earlier according to AAA, and West Texas Intermediate settled up 1.01% at $95.09. Philip Blancato of Osaic said the data puts the Federal Reserve very much in play for December, and that core CPI could reach 3% next year given higher oil prices, while also describing the inflation rise as transitory and saying much is already priced in. Bank of America fell almost 5% after third quarter revenue missed and more than $1.2 billion of federal penalties, with regulators saying it failed to report more than $5 billion in suspicious transactions. Morgan Stanley’s results beat expectations and the stock still ended nearly 3% lower.
Why It Matters?
The Berkshire streak is the most informative thing in this session and it sits at the bottom of the report. A trillion-dollar conglomerate holding enormous cash reserves is posting its best run since 2018 on the same day that leveraged AI borrowers are being marked down hard. That is the rotation expressed in a single pair of data points: capital moving from debt-funded growth toward balance sheet strength, at a moment when the 30-year Treasury yields above 5.6% and credit markets are reassessing anything that requires continuous refinancing. Berkshire deploying cash into this environment is the behaviour its structure was built for. Blancato’s position contains a contradiction worth noticing. He calls the inflation increase transitory and largely priced in, while forecasting core CPI of 3% next year on higher oil and saying the Federal Reserve is very much in play for December. Core reaching 3% from 2.6% is not transitory, it is entrenchment, and the two halves of that view cannot both hold. The core print itself undercuts the optimistic reading: at 0.3% monthly and 2.6% annually it exceeded forecasts on both measures, which means underlying pressure is broader than an energy story alone. Gasoline at $4.33 against $3.08 is a 40% increase and the most politically consequential number three weeks before the midterms. It is the mechanism behind rural inflation running at 4% against 3.6% in cities, and behind Senate seats in Kansas, Alaska and Iowa being rated toss ups. Morgan Stanley beating expectations and falling 3% is the earnings asymmetry in action, with beats rewarded below the historical median in four of the past six quarters while misses are punished more heavily.
What Next?
The Federal Reserve meets October 27 and 28 with December now the focus after this print, and Chairman Kevin Warsh speaks before the media blackout. Watch whether the rotation toward cash-generative businesses persists, since Berkshire’s streak and the AI selloff are the same trade seen from both ends. CoreWeave’s bonds and credit default swaps remain the live measure of AI credit stress. Remaining bank results will test whether Morgan Stanley’s experience of beating and falling is the pattern for the season. Oil above $95 keeps the inflation input elevated regardless of policy.
Affected Tickers and Coins: CRWV, ORCL, MU, AMD, SNDK, INTC, BAC, MS, UNH, AMGN, BRK.A, CL
Source: CNBC
