The Nasdaq Composite fell 2% on Wednesday as investors retreated from technology stocks amid surging inflation and Middle East tensions, marking the index’s first back-to-back decline in three weeks.
The Nasdaq dropped 509.32 points to close at 25,169.50, while the S&P 500 slid 1.6% to 7,266.99 and the Dow Jones Industrial Average sank 1.9% to 49,918.78, according to the Associated Press. The weakness in the nasdaq composite reflected a broader pullback from the artificial-intelligence trade that had driven markets higher for weeks.
May’s consumer price index, released Wednesday morning, climbed to 4.2% year-over-year, the highest level in more than three years, up from 3.8% in April. The headline inflation rate, which includes all prices, topped 4% for the first time since April 2023, according to the U.S. Bureau of Labor Statistics. Core CPI, excluding volatile food and energy, rose 0.2% for the month and 2.9% annually, slightly below expectations on the monthly measure.
Chip stocks bore the brunt of the selling, falling for the fourth day in five as investors grew nervous about valuations of AI-linked megacaps. Shares of Micron Technology, Advanced Micro Devices, and Broadcom traded lower, while the iShares Semiconductor ETF declined 3% after rolling over on Tuesday. The semiconductor index has still gained more than 80% this year despite the recent pullback.
Investors are growing more nervous about the valuation of AI stocks, especially amid the rising prospect of higher inflation and interest rates, according to reporting from The Guardian. The sell-off comes after weeks of ferocious buying fueled by enthusiasm for all things tied to artificial intelligence, but concerns have mounted that prices have simply shot too high, too fast.
Oil prices rose after President Donald Trump threatened additional strikes on Iran. West Texas Intermediate crude futures climbed 3% to top $91 a barrel. “The Iran war story is really consequential,” said Jed Ellerbroek, portfolio manager at Argent Capital Management, in comments reported by CNBC. “Either investors are going to be proven right, that there’s nothing to worry about, Trump will take care of it, we’ll get a deal with Iran and the strait will open up, but if not, it feels like oil prices are going to have to go up a lot.”
Sources
- Associated Press — Nasdaq Composite 2% decline on June 10, S&P 500 and Dow performance, first back-to-back decline in three weeks
- U.S. Bureau of Labor Statistics — May CPI rose 4.2% year-over-year, highest since April 2023; core CPI 2.9% annually
- CNBC — Chip stock performance, oil price movement, Trump Iran threats, Jed Ellerbroek commentary
- The Guardian — Investor concerns about AI stock valuations amid inflation and rate hike prospects
