S&P 500 Slips as Hot Inflation Data and Oil Surge Rattle Markets
The S&P 500 retreated from record territory on Tuesday after April CPI inflation came in hotter than forecast, CNBC reported, with rising energy prices adding a second layer of pressure on already stretched markets.
The broad index closed 0.16% lower at 7,400.96. The Nasdaq Composite fell 0.71% to 26,088.20. The Dow Jones Industrial Average bucked the trend, gaining 56 points to finish at 49,760.56.
Chip Rally Runs Out of Steam
The semiconductor sector, which had powered both the S&P 500 and Nasdaq to all-time highs just a session earlier, led the retreat Tuesday. Micron Technology shed 3.6% after surging more than 53% over the prior month amid a broad memory chip rally. Advanced Micro Devices fell roughly 2%, and Qualcomm dropped 11% despite each posting enormous gains through April.
The pullback reflected profit-taking rather than any fundamental shift, though hotter inflation data gave traders an additional reason to trim exposure to high-multiple growth stocks.
April Inflation Comes in Above Estimates
The Bureau of Labor Statistics reported that the consumer price index rose 0.6% month-over-month in April. That pushed the annual rate to 3.8%, the highest reading since May 2023. Economists surveyed by Dow Jones had penciled in a 3.7% year-over-year gain, making the miss modest but notable.
Thomas Martin, senior portfolio manager at Globalt Investments, told CNBC the move higher in inflation was not dramatic but persistent. He described it as a steady upward drift rather than a sudden spike, warning that prolonged conflict in the Middle East would continue feeding price pressures into the broader economy.
Oil Jumps on Iran Ceasefire Doubts
Energy markets moved sharply higher after President Donald Trump described the month-old U.S.-Iran ceasefire as dangerously fragile following the rejection of a new counterproposal from Tehran. Iran’s latest demands included war reparations, control over the Strait of Hormuz, and the lifting of economic sanctions. West Texas Intermediate crude jumped more than 4% to settle at $102.18 a barrel. Brent crude closed above $107.
With consumer spending representing roughly two-thirds of U.S. economic output, sustained energy price gains pose a direct threat to household budgets. Martin cautioned that higher gas prices would increasingly squeeze consumers the longer the conflict remained unresolved.
Market Valuations Remain a Concern
On the sidelines of the Sohn Conference in New York, David Einhorn, president of Greenlight Capital, acknowledged missing much of the market’s recent rebound. He told CNBC he has viewed equities as richly priced for several years and still considers stocks historically expensive, suggesting the best buying opportunities remain ahead rather than behind.
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