dailyloe.com – The S&P 500 experienced a decline on Tuesday, affected by rising oil prices and a higher-than-expected annual consumer price index reading for April. The broad market index dropped 0.7%, while the Nasdaq Composite fell 1.2%. Additionally, the Dow Jones Industrial Average decreased by 295 points, or 0.6%.
West Texas Intermediate futures surged 3% to exceed $101 per barrel, with Brent crude also climbing 3% to surpass $108. These increases followed a previous advance, which began after President Donald Trump criticized the ceasefire between the U.S. and Iran as “unbelievably weak.” He described it as being “on massive life support” after rejecting Iran’s counterproposal for ending the conflict.
Iran’s latest counteroffer includes demands for war reparations, full sovereignty over the Strait of Hormuz, the release of frozen Iranian assets, and lifted sanctions. With energy prices remaining high, further emphasis will be placed on inflation data to evaluate the Iran war’s impact on the U.S. economy.
In April, the consumer price index rose by 0.6%, resulting in an annual inflation rate of 3.8%, as reported by the Bureau of Labor Statistics. While the monthly inflation was in line with expectations, economists surveyed by Dow Jones anticipated a 3.7% annual increase. This annual inflation rate marks the highest level since May 2023.
Thomas Martin, a senior portfolio manager at Globalt Investments, noted, “It isn’t like it’s an avalanche, but it’s a steady move upward.” He added that inflation is likely to continue increasing as long as the conflict in the Middle East persists without negotiation progress. Martin stated, “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.”
Meanwhile, Micron Technology, which had previously propelled the S&P 500 and Nasdaq Composite to record highs, reversed its recent gains, dropping more than 5%. Last week, Micron’s stock experienced a surge of over 37% and rose more than 6% on Monday due to a rally in memory chips.
In addition to Micron, Advanced Micro Devices and Qualcomm saw declines of 3% and 10%, respectively. Citi expressed optimism regarding Nvidia’s upcoming sales, reaffirming its buy rating and $300 price target ahead of the chipmaker’s earnings report scheduled for May 20. This target implies a nearly 37% gain from Micron’s recent performance.
