Chip sector slump drags Wall Street lower
Major US stock indices closed mostly lower on Tuesday as a hotter-than-expected inflation reading and a broad pullback in semiconductor stocks dragged markets down from record highs reached the previous day.
The S&P 500 fell 0.16% to close at 7,400.96, while the Nasdaq Composite dropped 0.71% to 26,088.20, according to CNBC. The Dow Jones Industrial Average bucked the trend, advancing 56.09 points, or 0.11%, to end the session at 49,760.56.
Inflation tops forecasts
The Bureau of Labor Statistics reported that the consumer price index rose 0.6% in April, putting the annual inflation rate at 3.8% – the highest since May 2023 and above the 3.7% annual gain economists polled by Dow Jones had anticipated. Excluding food and energy, inflation rose 2.8% annually.
Thomas Martin, senior portfolio manager at Globalt Investments, told CNBC that inflation is just “going to keep on building” the longer the conflict in the Middle East continues. “As these gas prices and other prices are higher, it’s going to crimp more and more people, so the setup is for there to be continued struggles for the consumer,” he said.
Chip stocks retreat
Semiconductor stocks led the day’s declines, pulling back sharply after a weeks-long rally. Qualcomm plunged 13% in what CNBC reported was its worst session since 2020. Intel dropped 8%, while On Semiconductor and Skyworks Solutions each fell more than 6%. The iShares Semiconductor ETF sank 5%.
Micron Technology, which had driven the S&P 500 and Nasdaq to record highs on Monday, reversed course and fell 3.6%. The stock had surged more than 37% the previous week and approximately 53% the month before.
Oil prices rise amid Iran tensions
West Texas Intermediate futures jumped 4.19% to settle at US$102.18 per barrel, while Brent crude settled up 3.42% at US$107.77. The gains followed US president Donald Trump’s remarks calling the month-old ceasefire between the US and Iran “unbelievably weak” and “on massive life support” after rejecting a counterproposal from Tehran.
Meanwhile, Greenlight Capital president David Einhorn told CNBC on the sidelines of the Sohn Conference in New York that stocks remain “very, very pricey” on a historical basis. “Sooner or later, I think we’ll wind up with a better opportunity,” Einhorn said.
The market jitters over the Iran conflict trace back to Feb. 28, 2026, when the United States and Israel launched large-scale airstrikes on Iran, targeting military and government sites and assassinating several Iranian officials, including Supreme Leader Ali Khamenei. Iran responded by closing the Strait of Hormuz, a critical chokepoint for global oil shipments, dealing an immediate blow to energy markets.
Negotiations on the ceasefire have repeatedly stalled over core disagreements. Issues under discussion include freedom of navigation through the Strait of Hormuz, Iran’s nuclear and ballistic programme, reconstruction and sanctions, and a long-term peace agreement, according to the UK House of Commons Library. According to Axios, the US and Iran were reportedly close to agreeing on a one-page memorandum of understanding that would declare an end to the war and open a 30-day period of negotiations, though no deal had been reached as of Tuesday.
