US stocks closed lower on Wednesday as the Consumer Price Index rose 4.2% year-over-year in May, reaching its highest level since April 2023, while renewed U.S.-Iran tensions pushed oil prices higher and rattled global markets. Major indexes declined, with the Dow Jones Industrial Average falling 1.87% to 49,918.78, the S&P 500 shedding 1.62% to 7,266.99, and the Nasdaq Composite dropping 1.98% to 25,169.50. The market decline was driven by concerns that the Federal Reserve may keep interest rates elevated for longer than anticipated, alongside a rotation out of high-flying technology shares.

The CNN Money Fear and Greed index showed a further decline in overall market sentiment, remaining in the "Fear" zone at 27.6 versus a prior reading of 32.5. The Dow Jones index fell more than 900 points during the session following renewed U.S.-Iran strikes in the Strait of Hormuz after President Donald Trump threatened additional strikes against Iran. On the economic data front, the annual inflation rate accelerated to 4.2% in May compared to 3.8% in the previous month, in line with market estimates.

Most sectors on the S&P 500 closed on a negative note, with industrials, materials, and information technology stocks recording the biggest losses. However, consumer staples and energy stocks bucked the overall market trend, closing the session higher. The Bureau of Labor Statistics reported that core inflation also accelerated from the prior month. Energy prices were a major contributor to the increase, with oil prices surging during the session as investors monitored developments in the Middle East. Treasury yields moved higher following the inflation data release, reinforcing expectations of a prolonged period of higher rates.

Oracle Corporation (NYSE: ORCL) fell 2.21% to close at $201.26 during regular trading but dropped an additional 10.12% in after-hours trading to $180.89. The company reported fourth-quarter fiscal 2026 results that topped expectations, with revenue rising 21% year-over-year to $19.18 billion and adjusted earnings increasing 24% to $2.11 per share. Growth was driven by strong demand for AI-related cloud services, with cloud revenue climbing 47% to $9.9 billion and cloud infrastructure revenue surging 93% to $5.8 billion. Oracle reported remaining performance obligations of $638 billion, up 363% year-over-year, and forecast first-quarter revenue growth of 27%-29%. The company reaffirmed its fiscal 2027 revenue target of $90 billion and expects to raise about $40 billion in fiscal 2027 through debt and equity financing.

POP Culture Group Co. Ltd. (NASDAQ: CPOP) saw a remarkable surge of 322.22%, closing at $1.52, and rose another 50.66% in after-hours trading to $2.29. The company reported strong growth for the six months ended Dec. 31, 2025, with net revenue rising 65% year-over-year to $68.9 million. Operating income more than doubled to $6.58 million from $2.72 million a year earlier. Honeywell International Inc. (NASDAQ: HON) dropped 4.55% to $205.88, and Caterpillar Inc. (NYSE: CAT) fell 6.40% to $856.16, both pressured by rising oil prices and inflation risks following geopolitical tensions. Navan Inc. (NASDAQ: NAVN) rose 0.92% to close at $20.87 and surged 19% in after-hours trading to $24.88 after reporting first-quarter fiscal 2027 results that exceeded expectations, with revenue rising 40% year-over-year to $220.2 million.

On the earnings front, Core & Main Inc. (NYSE: CNM) reported upbeat earnings for the first quarter on Wednesday. Cracker Barrel Old Country Store Inc. (NASDAQ: CBRL) shares jumped more than 22% on Wednesday after the company reported better-than-expected third-quarter financial results and raised its FY26 sales guidance above estimates. Investors are awaiting earnings results from Driven Brands Holdings Inc. (NASDAQ: DRVN), Adobe Inc. (NASDAQ: ADBE), and Lennar Corp. (NYSE: LEN) today.

Former Congresswoman Marjorie Taylor Greene questioned why Americans were paying high gas prices despite President Donald Trump's claims of secretly moving oil out of the Strait of Hormuz. Trump announced on Truth Social that a secret US military mission conducted last month escorted over 100 million barrels of oil and more than 200 commercial ships through the waterway. He asserted that the United States controls the Strait of Hormuz, Iran's military is defeated, and its economy is lost.

Key Claims and Context

Trump stated the mission was undertaken on his direction to aid the safe passage of ships. The announcement did not include additional operational details. A CNBC report cited JPMorgan analysts estimating over 2 million barrels per day moving on ships with transponders shut off, though military officials cited in the report stated the US was communicating with ships rather than escorting them. Before the Iran war, an estimated 15-20 million barrels of oil moved through the Strait daily, accounting for over a fifth of global crude oil shipments.

Reaction and Gas Prices

Greene responded on X, asking why Americans were paying an average of $4.50 per gallon for gas if Trump's claims were true. American Automobile Association data indicated several states, including California and Illinois, were paying upwards of or close to $4.50 per gallon, while the national average was $4.1510 per gallon. Greene had previously questioned how new Federal Reserve Chair Kevin Warsh lowering interest rates would translate to lower prices for groceries and gas. Meanwhile, Illinois Gov. Jay Robert ‘JB' Pritzker announced the state would freeze an automatic hike in gas tax, delaying the increase to January next year to provide relief.