Korea's Market Just Hit the Brakes 🛑

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A hotter-than-expected inflation report turned a U.S. tech sell-off into a global one, with South Korea's market halted Thursday after an 8% plunge.

Let’s get into it 👇️ 

🏦 Bank of America agreed to pay $1.2 billion over anti-money-laundering and sanctions failures, the third-largest penalty in Treasury's history. Regulators said the bank failed to flag national security risks, including Chinese money-laundering networks. Treasury Secretary Scott Bessent said even the biggest banks are "not above the law." The stock fell Wednesday.

🏠️ Social Security recipients will get a 3.6% cost-of-living raise in 2027. The increase starts in January and works out to about $75 more per month for the average retiree. It reaches nearly 72 million beneficiaries, and it is the biggest raise in four years because inflation has been running hot.

TSMC posted a record quarterly profit and raised its 2026 growth forecast. Net income jumped nearly 69% to about $23.6 billion, beating estimates, and the chipmaker now expects full-year revenue growth of about 44%. Even so, U.S.-listed shares had dropped in the sell-off ahead of the report.

🔻 CoreWeave shares plunged more than 15% Wednesday as fears about AI borrowing grew. The Nvidia-backed company carries about $50 billion in debt, and its bonds now trade at yields that signal distress. Management says its contract backlog covers its obligations, but the market is clearly skeptical.

🛢️ Oil climbed Wednesday as attacks in the Gulf kept supply fears alive. Brent crude settled at $106.06 a barrel and U.S. crude hit a three-week high near $95, after the Houthis struck a Saudi Aramco office building in Dhahran and ships were hit near the Strait of Hormuz. A container ship sank south of the strait.

💼 Netflix is cutting about 6% of its workforce, nearly 1,000 jobs. Co-CEOs Greg Peters and Ted Sarandos announced the layoffs Wednesday, calling them "organizational changes" while insisting business is strong. The cuts hit product, tech, legal and HR, and come days before the company reports third-quarter earnings.

📊 The S&P 500 fell 1.1% Wednesday, ending its longest stretch without a 1% daily drop in more than six years. The streak ran past 50 trading sessions. Tech led the decline, while health care and consumer staples gained, as investors rotated toward defensive sectors.

📈 Inflation is now outrunning paychecks. With prices up 3.7% over the past year, wage growth of roughly 3% means many workers are losing ground. Chicago Fed President Austan Goolsbee called the report "discouraging" but said he wants more data before acting. The next Fed decision is Oct. 28.

South Korea's Kospi index plunged about 8% Thursday, triggering a 20-minute trading halt, as chip and AI stocks across Asia were hit hard.

SK Hynix and Samsung Electronics each fell roughly 10%, Japan's Nikkei dropped about 5% at one point, and SoftBank sank more than 9%.

The rout followed a rough Wednesday in the U.S., where the Nasdaq fell 1.9% and the Philadelphia Semiconductor Index extended a six-day slide to 11.6%, wiping out roughly $1.6 trillion in value.

The trigger was September's inflation report: consumer prices rose 3.7% from a year earlier, up from 3.4% in August and above the 3.6% economists expected, with core prices (which strip out food and energy) also running hot.

That revived talk that the Federal Reserve could raise interest rates again at its Oct. 28 decision, and traders now see roughly a one-in-three chance or better.

Higher rates are especially painful for the AI boom, which is largely built on borrowed money.

Data centers and chip capacity cost enormous sums to finance, and rising Treasury yields make that debt more expensive.

CoreWeave, a heavily indebted AI cloud company, fell more than 15% Wednesday as its bonds slid into distressed territory, a sign investors are starting to price in credit risk, not just growth.

What to watch:

• Whether the AI trade can find a floor.

  • TSMC's blowout results Thursday, including a record quarterly profit and CEO C.C. Wei's comment that he sees "no sign of slowdown," landed in the middle of the sell-off, a sign the market is now focused on rates and financing rather than demand.

• Watch Treasury yields, the next batch of inflation data, Fed commentary ahead of Oct. 28, and whether the sell-off in Asia carries over into U.S. trading on Thursday.

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⚠️ Disclaimer: Not financial advice. Do your research before making any trades.