The CBOE Volatility Index is moving higher, up 6% to 16.4, as traders buy protection ahead of CPI data due later this week. Options activity is running about 18% above the 30-day average, with notable hedging in tech and semiconductor names. The move in VIX marks its highest level so far this month.
Real estate and utilities are leading the S&P 500 at mid-day, each up about 0.8%, benefiting from the pullback in yields. Consumer staples are also higher. On the downside, energy is the worst performer, followed by tech and communication services. Overall, seven of the eleven S&P sectors are in the green heading into the afternoon.
Overseas markets set a weak tone overnight. Japan’s Nikkei fell 1.4% and Hong Kong’s Hang Seng lost 0.9% after China reported slower industrial output growth. In Europe, the Stoxx 600 is flat mid-day as traders there await minutes from the ECB’s last meeting. The global backdrop remains cautious with trade and geopolitical tensions still in focus.
Retail names are splitting the market after morning results. Home Depot is down 2.4% after cutting its full-year sales outlook, citing softer big-ticket spending. Walmart is up 1.5% thanks to a strong e-commerce quarter and steady grocery traffic. So far this season, 73% of S&P 500 companies have topped EPS estimates, but guidance remains cautious heading into the second half.
One bright spot mid-day is the Russell 2000, which continues to outperform the broader market. The small-cap index is up 0.6% as investors rotate into more domestically focused and rate-sensitive names. Regional banks are helping lead the charge, with the KRE ETF up 0.9% as falling yields ease pressure on balance sheets.
Mega-cap tech is weighing on the Nasdaq heading into the afternoon. Apple and Microsoft are both down about 0.7% as traders take profits after last week’s AI-driven rally. Nvidia is holding near the flatline, pausing after an 8% gain over the prior five sessions. The broader tech sector, tracked by XLK, is down 0.5% mid-day, making it the second-worst performer in the S&P 500 so far.
Wall Street's record-setting run hit a wall today. Investors reacted to hotter than expected inflation data rising geopolitical tensions between the United States and Iran and renewed weakness in technology stocks interrupting the recent rally that had pushed the S&P 500 and Nasdaq to fresh record highs just a day earlier.
April's Consumer Price Index rose 3.8% year over year topping the 3.7% consensus while oil climbed above $100 per barrel after CNN reported that President Trump was more seriously considering restarting combat operations in Iran. The combination proved toxic for equities. Chip stocks bore the worst of it with Qualcomm plummeting 13% for its worst session since 2020 while Intel dropped 8% and the iShares Semiconductor ETF sank 5%. With sticky inflation now reinforcing the case for the Federal Reserve to hold rates higher for longer the market mood shifted decisively from optimism to caution. Every data point that follows this week will matter.
The major averages are mixed at mid-day as traders work through a choppy session. The Dow is up 85 points, or 0.2%, while the S&P 500 is hovering near flat and the Nasdaq is down 0.3%. Volume is running slightly below average, with investors hesitant to make big bets before this afternoon’s Fed speakers and key earnings after the bell. The 10-year Treasury yield has eased to 4.36%, giving some support to rate-sensitive names.