Wall Street's major indexes experienced mixed trading on Wednesday, influenced by a continued selloff in technology stocks and rising geopolitical tensions in the Middle East. The S&P 500 was nearly flat after recovering from an early decline, while the Dow Jones Industrial Average fell around 0.5%. The Nasdaq Composite, heavily weighted towards technology stocks, also traded lower.
Tech Stocks Under Pressure
Technology and artificial intelligence-related shares extended recent losses. Nvidia, Broadcom, and Micron Technology fell between 1% and 3.8%, while the S&P 500 technology index dropped 1.1%. Shares of AI server maker Super Micro Computer tumbled more than 14% after announcing plans to raise $7 billion through stock and convertible preferred share offerings to support growing demand for its AI servers. Despite recent volatility, Micron Technology remains up more than 230% this year.
- Nvidia: -1% to -3.8%
- Broadcom: -1% to -3.8%
- Micron Technology: -1% to -3.8%
- Super Micro Computer: -14%
Some semiconductor-related companies bucked the trend, with KLA and Applied Materials gaining nearly 6% each, providing some support to the broader market.
Inflation Data and Market Sentiment
Investor sentiment received some support from fresh inflation data. US consumer prices rose 4.2% year-on-year in May, largely due to higher energy costs linked to Middle East tensions. The reading matched economists' expectations, helping Treasury yields ease slightly. The benchmark 10-year Treasury yield slipped to around 4.52%, while the two-year yield edged down to 4.11%.
"While it is very much in-line with expectations, it's still moving in the wrong direction," said Art Hogan, chief market strategist at B Riley Wealth.
Geopolitical Tensions and Oil Prices
Renewed tensions between the United States and Iran overshadowed the inflation data. US President Donald Trump stated that Iran had taken too long to negotiate a deal and would now "have to pay the price." Tehran signaled it could reassess diplomatic engagement with Washington following recent exchanges of fire. Oil prices rose amid concerns over disruptions to global energy supplies, with Brent crude gaining about 1.3% to $92.60 per barrel.
Global Market Impact
Asian markets also came under pressure, with South Korea's Kospi plunging 4.5% and Japan's Nikkei 225 falling 1.9%, hurt by weakness in technology shares and concerns over rising producer prices. European markets traded lower as investors assessed the implications of rising inflation, geopolitical risks, and uncertainty over future central bank policy.
The CBOE Volatility Index, often referred to as Wall Street's "fear gauge," climbed above 20, its highest level since early April, reflecting increased caution among investors.
The next milestone for investors will be the Federal Reserve's June meeting, where markets still expect interest rates to remain unchanged, though a rate hike later this year is anticipated.
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