Upstart and Growth Stocks Decline as Hotter September Inflation Drives Treasury Yields Higher

Growth stocks stumbled in morning trading after official inflation data for September came in higher than economists expected. Upstart Holdings, Inc. (NASDAQ:UPST) dropped over 5%, while SoundHound AI, Inc. (NASDAQ:SOUN) and Fastly, Inc. (NASDAQ:FSLY) both slipped over 4%. The pullback followed a reported 3.7% year-over-year rise in the September consumer price index, exceeding market estimates of 3.6%. Core inflation, which excludes volatile food and energy costs, also ticked up to 2.6% annually against a 2.5% forecast.

The hotter inflation figures quickly pushed benchmark Treasury yields higher, with the 10-year yield rising past 5.27% and the 30-year yield topping 5.59%. Surging yields create valuation headwinds for risk assets, particularly high-growth technology companies. Higher benchmark rates raise the discount rate applied to projected earnings, compressing the valuation multiples investors are willing to pay for businesses whose future cash flows sit further down the road.

Investors will be watching how persistent inflation impacts broad monetary policy expectations as third-quarter earnings season begins. For Upstart specifically, loan demand and default metrics remain key indicators. While macroeconomic default expectations have eased slightly from their peak, higher yields and tight financial conditions could continue to influence loan origination activity and broader investor appetite for growth equities.