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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.
