The S&P 500 (^GSPC 1.62%) fell 1.62% to 7,266.99, the Nasdaq Composite (^IXIC 1.98%) lost 1.98% to 25,169.50, and the Dow Jones Industrial Average (^DJI 1.87%) dropped 1.87% to 49,918.78 as investors reacted to May inflation figures and increasing Middle East tensions.
Market movers
Artificial Intelligence (AI) names led the slide, with Super Micro Computer tumbling over 27% after unveiling a $7 billion equity raise. Chip bellwethers Nvidia and Micron Technology dropped, while Apple inched up slightly, bucking the trend.
Walmart and Costco Wholesale both gained as investors rotated out of tech stocks. Cracker Barrel Old Country Store closed up 23% on earnings strength.
What this means for investors
Stocks fell again today as tensions in the Gulf ratcheted upward and sticky inflation data worried investors. Elevated energy costs pushed the Consumer Price Index to 4.2% in May, the highest it’s been since April 2023, prompting Wall Street to de-risk.
Treasury yields remain elevated at almost 4.55%, and WTI crude increased 2.5% to over $90 per barrel. With peace negotiations under increasing strain, it isn’t clear when oil supplies might normalize again. That is fueling fears that inflation will stay higher for longer, making Federal Reserve rate hikes more likely.
Market confidence after a blowout earning season is starting to fade, and high stock valuations are one of several mounting warning signs. While there’s still broad confidence in AI and emerging technologies, investors should brace for further turbulence. The CBOE Volatility Index (VIX), which measures near-term volatility, rose 12% to 22.22 today, making it important to stay focused on long-term goals.
Emma Newbery has positions in Apple and Nvidia. The Motley Fool has positions in and recommends Apple, Costco Wholesale, Micron Technology, Nvidia, and Walmart. The Motley Fool has a disclosure policy.
