US inflation accelerated to 3.7% in September, sending technology stocks lower while Walmart and Eli Lilly gained as investors sought businesses with more dependable demand.

Annual inflation rose from 3.4% in August, while consumer prices increased 0.6% over the month, according to the Bureau of Labor Statistics. The figures renewed concerns that the Federal Reserve could raise interest rates again.

Gasoline drives inflation higher

Gasoline prices jumped 9.1% in September, accounting for more than half of the monthly increase in consumer prices. Overall energy prices were 20.4% higher than a year earlier.

Underlying inflation also strengthened. Core CPI, which excludes food and energy, rose to 2.6% annually from 2.4% in August, while shelter costs increased 0.4% during September.

The combination made the report harder to dismiss as an energy-only shock.

Walmart and Lilly rise as technology falls

The Nasdaq dropped 1.88% and the S&P 500 fell 1.11% on October 14. AI-related shares suffered heavily, with Oracle losing 8.8%, CoreWeave falling about 15% and Nebius dropping 10%, Reuters reported.

Meanwhile, Walmart gained approximately 3.5%, and Eli Lilly rose 3.6%. Barron’s reported that healthcare stocks broadly resisted the market decline.

The contrast reflected demand for businesses selling everyday necessities and medicines. Those companies still face risks, but their sales can be less sensitive to economic conditions than discretionary purchases.

Higher borrowing costs test AI spending

Treasury yields rose after the release as traders increased expectations for further monetary tightening.

For companies borrowing heavily to build data centers and buy chips, sustained high rates can make new financing and refinancing more expensive. Businesses without consistent profits or sufficient operating cash flow may be particularly exposed.

Related: The AI Boom Is Increasingly Being Financed by Debt.

The session showed investors becoming more selective: AI growth remains attractive, but expensive financing increases the value of reliable earnings and cash flow.

Disclosure: This article does not represent investment advice. The content is for informational and educational purposes only.