US inflation picked up again in September, and Wall Street's technology shares fell sharply on Thursday as traders raised their bets on another interest rate rise from the Federal Reserve before the end of the year.

Tech shares lead the slide

The personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 0.5% in September from August and 3.6% from a year earlier, according to the Commerce Department. The annual rate climbed from 3.4% in August. Core PCE, which strips out food and energy, rose 0.3% on the month and 3.1% on the year. The readings were broadly in line with economists' expectations.

What happens next

The data landed a day after the Fed kept interest rates unchanged. The Nasdaq fell 1.8% intraday after the opening bell, with Alphabet down 12%, ServiceNow down 24% and Amazon down 2.9% among the laggards, according to market reporting. US stock index futures had already pointed lower before the open: Dow futures were down 146 points, S&P 500 futures down 27.5 points and Nasdaq 100 futures down 346.5 points, Reuters reported.

Traders now put the chance of a December rate hike at roughly 80% to 85%, according to CME Group's FedWatch tool as cited by market outlets, with estimates differing slightly by timing and rounding. Weekly jobless claims came in at 194,000, below the 199,000 expected.

The combination of sticky inflation and a resilient jobs market leaves the Fed with little room to ease policy, analysts said. Higher rates raise the opportunity cost of holding assets that pay no income, such as gold, which also slipped on Thursday. Attention now turns to further inflation data and the Fed's December meeting, where the market expects a decision on whether borrowing costs rise again.

Sources: Reuters via WIXX, Upstox.