Wall Street Rebounds On Rotation To Safety As KOSPI Crashes

Wall Street bounced back on Thursday as investors rotated out of artificial intelligence-related technology stocks and into safer sectors, even as a hot US inflation print and a historic sell-off in Asia rattled global markets.

The Dow Jones Industrial Average rose 1.08% to 52,177.69, the S&P 500 gained 0.33% to 7,744.06, and the Nasdaq Composite edged up 0.08% to 26,713.03. Money flowed into Healthcare, Consumer and Materials stocks as investors trimmed exposure to the AI trade.

Producer prices post biggest jump in 4½ years

The rally came despite another hot inflation reading. US producer prices surged 1.3% month-on-month and 6.3% year-on-year in September, the largest monthly increase in four and a half years, driven largely by higher gasoline and diesel costs.

Europe steadies on healthcare and earnings

In Europe, the STOXX Europe 600 rose 0.38% to 640.16, lifted by a 2.4% gain in Healthcare stocks and stronger corporate earnings. Technology, however, fell 1.5% amid lingering concerns over AI-related valuations and funding costs.

Asia bears the brunt

Asian markets suffered a far sharper sell-off. South Korea’s KOSPI plunged 7.57% to a six-month low, triggering a circuit breaker, as chip heavyweights Samsung Electronics and SK Hynix tumbled 9.5% and 11.1% respectively.

Japan’s Nikkei 225 dropped around 4.9%, while Hong Kong’s Hang Seng declined 1.03%. Concerns over debt-funded AI infrastructure investment and higher interest rates drove a broad de-risking across technology stocks in the region.

Oil holds above US$105

Brent crude edged 0.13% lower to US$105.69 a barrel, as expectations of additional supply from possible US sanctions relief offset continuing supply risks in the Middle East.

Analysts said the rotation out of US AI-related technology stocks may continue to weigh on global risk appetite in the near term, even as defensive sectors attract fresh inflows.

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