Wall Street signals rising concern over U.S. economic resilience and rate risks

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Wall Street concern over US economy

Highlights

NFIB index drops to 97.9 in September from 98.7, with more small businesses citing poor sales and economists flagging stalling business momentum.
September inflation rises to 3.7% from 3.4%, prompting markets to price in a 50% chance of another Federal Reserve rate hike in October.
Nasdaq futures fall, South Korea’s KOSPI plunges, 10-year U.S. Treasury yields peak at 5.32%, and Brent crude surges to $106 a barrel amid broad risk-off sentiment.

Survey signals and rate pressure build

As reported by Fortune, recent market unease is drawing support from business survey data and economist warnings that suggest parts of the U.S. economy are losing momentum. Bespoke Investment Group said the latest National Federation of Independent Business survey showed more small businesses identifying poor sales as their top problem, a pattern the firm associates with past economic contractions.

The NFIB index falls to 97.9 in September from 98.7 in August. Pantheon Macroeconomics economists Samuel Tombs and Oliver Allen say other major business surveys also indicate activity loses some momentum toward the end of the third quarter, likely weighed by a rebound in global energy prices, while also noting the NFIB response pool has shrunk to 411 companies from around 1,200 a decade ago.

Moody’s Analytics economist Mark Zandi says the U.S. economy is “vulnerable,” with particular concern around the labor market. He says payroll growth averages about 40,000 over the past year and is essentially flat excluding healthcare, while weak hiring, low hours worked and falling labor force participation leave the economy exposed.

Zandi also warns that higher rates demanded by the Federal Reserve and bond markets could threaten artificial intelligence capital spending. In his view, a higher cost of capital makes investment more expensive and lower valuations make it harder to fund the current pace of AI buildout, raising the possibility that AI investment becomes a point of economic stress if rates stay high for more than a quarter or two.

September consumer price data adds to that risk after the inflation reading comes in at 3.7%, up from 3.4% a month earlier and above analysts’ expectations. Harris Financial Group’s Jamie Cox says inflation pressure remains strong and Pimco economist Tiffany Wilding says the report is not a good outcome for the Federal Reserve, with markets moving to price in a 50% chance of another rate increase in October.

Technology shares and bond markets reflect broader anxiety

Selling pressure is spreading quickly through equity markets, especially in technology stocks, as traders respond to the prospect of higher-for-longer rates. South Korea’s KOSPI falls sharply and briefly triggers a trading halt, while Nasdaq futures point lower and companies tied to AI infrastructure, including CoreWeave, Oracle and chipmakers, come under renewed pressure.

The move comes despite supportive company news in the sector. TSMC reports third-quarter earnings above expectations and guides for higher capital expenditure over the next two years, Apple closes at a record high and becomes only the second company after Nvidia to reach a $5 trillion market capitalization, and Anthropic says it is profitable on an adjusted basis although its reported revenue growth appears slower than previously estimated.

Bond markets are also showing unusual volatility as investors weigh safe-haven demand against the need for a larger risk premium. The benchmark 10-year U.S. Treasury yield peaks at 5.32% before easing back to 5.08%, underscoring how quickly sentiment is shifting across asset classes.

Broader market moves reinforce the defensive tone. S&P 500 futures are down 0.24% after the index loses 1.11% the previous day, Europe’s Stoxx 600 edges lower while the UK’s FTSE 100 rises, Asian markets are mixed with steep losses in South Korea and Japan, Brent crude trades at $106 a barrel and Bitcoin falls to $81,265.

We previously reported on how long-term U.S. borrowing costs moving above 5% are intensifying pressure across the economy, from mortgage rates and housing activity to federal interest expenses as deficits near $2 trillion. That piece also explained how heavy Treasury issuance and rising funding needs—including debt raised for AI infrastructure—are adding to competition for capital, while political gridlock makes near-term deficit relief unlikely.

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