Oil jumps on Iran strikes, Nasdaq 100 falls on hot inflation
Oil prices jumped and US stocks fell on Wednesday as renewed US-Iran strikes in the Strait of Hormuz reignited supply concerns, sparking a selloff in technology shares. West Texas Intermediate crude climbed 3.3% to $91.07, while the Nasdaq 100 slid 1.4%. The annual inflation rate rose to 4.2% in May, with markets pricing in a Fed rate hike by year-end.
*this image is generated using AI for illustrative purposes only.
Oil prices jumped and US stocks fell on Wednesday as renewed US-Iran strikes in the Strait of Hormuz reignited supply concerns, sparking a broader selloff in high-valuation technology shares. The move came after President Donald Trump warned that Tehran had "taken too long to negotiate a deal" and would "have to pay the price," while threatening additional strikes against Iran. West Texas Intermediate crude climbed 3.3% to around $91.07 a barrel, while Brent rose 2.9% to roughly $94.10.
On Wall Street, losses were broad-based but concentrated in technology, as concerns over elevated AI-related valuations resurfaced alongside hotter-than-expected inflation data. The annual inflation rate climbed from 3.8% to 4.2% year over year in May, matching expectations and reaching the highest level since April 2023. Money markets now fully price in a 25-basis-point Fed rate hike by year's end.
Major Indices Performance
The S&P 500 fell 0.9% to 7,319.63, while the Dow Jones Industrial Average dropped about 592 points, or 1.2%, to 50,280. The Nasdaq 100 was the day's laggard, sliding 1.4% to 28,670. The small-cap Russell 2000 proved more resilient, slipping just 0.3% to 2,858.65. Gold extended its sharp pullback, falling 3.1% to around $4,128 an ounce and leaving the metal down nearly 13% so far this month.
| Index | Last | % Change |
|---|---|---|
| S&P 500 | 7,319.63 | -0.9% |
| Dow Jones | 50,280 | -1.2% |
| Nasdaq 100 | 28,670 | -1.4% |
| Russell 2000 | 2,858.65 | -0.3% |
Sector and Stock Movers
The Energy Select Sector SPDR Fund led all 11 S&P sectors, up 2.6%, as crude's surge lifted producers and Middle East supply risk returned to the fore. The SPDR S&P Oil & Gas Exploration & Production ETF topped the industry tables with a 3.7% gain. Higher oil prices punished airlines, dragging the U.S. Global Jets ETF down 3.8%, while rate-sensitive renewables slumped, with the Invesco Solar ETF tumbling 4.1%.
The selling was led by the Industrials Select Sector SPDR Fund, down 2.5%, followed by the Technology Select Sector SPDR Fund, off 1.6% as semiconductors buckled. The VanEck Semiconductor ETF lost 2.9% as Broadcom Inc., down 4.5%, and Micron Technology Inc., down 3.5%, weighed on the group. Super Micro Computer Inc. cratered 17.9% after announcing roughly $7 billion of equity and equity-linked financing to fund component purchases for some $39 billion of AI-server orders, stoking dilution fears.
Top Gainers and Losers
Casey's General Stores Inc. surged 14.3% after fiscal fourth-quarter results showed diluted EPS of $4.37, up 66% year-over-year. Murphy USA Inc. rose 9.0% as the spike in crude promised to fatten fuel margins. Devon Energy Corp. gained 6.5%, riding the oil rally alongside its post-Coterra-merger outlook, an $8 billion buyback and a 33% dividend increase.
| Name | % Change |
|---|---|
| Casey's General Stores Inc. | +14.3% |
| Murphy USA Inc. | +9.0% |
| E.l.f. Beauty Inc. | +7.8% |
| Duolingo Inc. | +7.1% |
| Devon Energy Corp. | +6.5% |
| Name | % Change |
|---|---|
| Super Micro Computer Inc. | -17.9% |
| Summit Therapeutics Inc. | -10.4% |
| Alcoa Corp. | -7.9% |
| Generac Holdings Inc. | -7.8% |
| Lazard Inc. | -7.6% |
How will the escalation of US-Iran tensions in the Strait of Hormuz impact global supply chains and shipping costs if the conflict persists?
Can the energy sector sustain its rally if the Federal Reserve proceeds with anticipated rate hikes to combat rising inflation?
Will the recent selloff in high-valuation technology stocks trigger a broader sector rotation into value stocks or small-cap equities?
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