AI Stock Selloff May Ease Pressure on US Rates

The sell-off of shares in companies related to artificial intelligence could ease pressure on interest rates in the U.S., said senior economist at BMO Capital Markets Jennifer Lee on Bloomberg This Weekend on November 1. In her opinion, this could help the Federal Reserve in its fight against inflation.

Last week, the Nasdaq-100 entered its third correction of 2026, and the S&P 500 fell by 1.8% on Friday. Lee explained that large data center operators need substantial funds for construction, and their demand for corporate debt was one of the factors driving up rates. The pressure was exacerbated by high energy prices and budgetary issues, and some holders of U.S. government bonds may be less reliable buyers than before. The construction boom also diverted land, skilled workers, and materials from other sectors: this displacement added to inflation and could make it more persistent.

Lee believes that the downturn could cool data center construction, which would help the Fed reduce inflation. "If they pull back a bit, it shows that some cooling might occur... All this demand, all this data center construction, and it really helps the Fed's work and reduces inflation," she said.

For crypto investors, the sell-off has two implications. The first is risk appetite. BitMine Chairman Tom Lee in a release on October 26 linked the recent cryptocurrency decline to the same risk aversion forces as the AI stock sell-off: "Cryptocurrencies were dragged down by the same 'risk aversion' forces as the AI stock sell-off. Unlike the end of 2025 and the beginning of 2026, cryptocurrency pullbacks were relatively shallow. ETH fell by 13% from its recent peak, while U.S. semiconductors (SOXX) lost 20% over the same period."

The second channel is interest rates, and it can work in the opposite direction. If the sell-off keeps rates low, bonds and cash will yield less, making Bitcoin and Ether relatively more attractive. These two effects manifest at different speeds: the outflow from risky assets hits immediately, while the effect of lower yields depends on whether they remain low for several weeks. This relief has clear limits.

Fed actions and upcoming data

The Fed raised the rate by 25 basis points on September 16, and on October 28 maintained the range of 3.75–4%, with 2 officials advocating for another hike. Lee described Chairman Kevin Warsh's press conference as quite hawkish and added that a rate hike in December seems predetermined. This week, the employment report and financial reports from Apple, AMD, and Qualcomm will test whether this cooling persists.