Closing Bell: Hot CPI Data and Escalating Middle East Tensions Spark Deep Tech Liquidation

A combination of hotter-than-expected headline inflation and intensifying military friction in the Middle East rattled investor confidence, sending major U.S. equity averages sharply lower.

As the U.S.-Iran war showed signs of igniting, market participants unwound long-duration growth bets, driving a renewed fixed-income sell-off that pushed the benchmark 10-year Treasury yield up to 4.54%.

The S&P 500 sank 1.62% to close at 7,266.99, the tech-heavy Nasdaq Composite plummeted 1.98% to 25,169.50, and the Dow Jones Industrial Average dropped 1.87% to finish at 49,918.78.

The benchmark price for U.S. crude rose 4% with escalating trade and military vulnerabilities, reversing early-week softness, and settled near $92 per barrel. High-beta growth indices anchored the downward session, while the energy sector outperformed significantly.

Three things to watch from today’s market:

• Headline Inflation Milestone Alters Yield Curve Dynamics: Headline May CPI accelerated to a 4.2% annual pace, driven by energy costs and persistent supply chain bottlenecks. While Core CPI rose a more muted 0.2% month-over-month, the structural stickiness of the top-line number led fixed-income traders to recalibrate terminal rate pricing, with some swaps market instruments factoring in heightened probabilities of an eventual Fed interest-rate hike by late 2026.
• AI Hardware Re-Rated as Industrials Join Sell-Off: Valuation anxiety and the shifting macroeconomic backdrop sparked heavy profit-taking across the core artificial intelligence cluster, sending market leaders like Nvidia (NVDA) and Micron Technology (MU) lower. Among the biggest S&P decliners: Super Micro Computer (SMCI), down 28% and Oracle (ORCL), off by more than 10%. The broader risk-off mood also triggered an immediate cascade that hit industrials particularly hard. Heavy equipment bellwether and prominent Dow component Caterpillar (CAT), down more than 6%, suffered the sharpest single-session contraction within the blue-chip average on economic growth concerns.
• Key Support Levels Hold Despite Intraday Rout: While the daily percentage drops looked severe, from a technical perspective, both the S&P 500 and the Nasdaq Composite managed to preserve critical structural support. Neither index traded below Tuesday’s session lows, and both benchmarks defended their respective 50-day moving averages. This dynamic offered a silver lining for market bulls, indicating that institutional demand continues to step in during deeper structural pullbacks.

Economic Events/Data Tomorrow (ET)

• 08:30 AM: Producer Price Index (MoM) (May)
• 08:30 AM: Core PPI (MoM) (May)
• 08:30 AM: Initial Jobless Claims (Weekly)
• 08:30 AM: Continuing Jobless Claims

Earnings Calendar (ET)

• Premarket Thursday: Lovesac (LOVE), Aurora Cannabis (ACB), Hookers Furniture (HOFT), Vera Bradley (VRA)
• Postmarket Thursday: RH (RH), Lennar (LEN), Adobe (ADBE)

This material is intended for informational purposes only and should not be considered a personalized recommendation or investment advice. Investors should review investment strategies for their own particular situations before making any decisions.

Schwab Network is brought to you by Charles Schwab Media Productions Company (“CSMPC”). CSMPC is a subsidiary of The Charles Schwab Corporation and is not a financial advisor, registered investment advisor, broker-dealer, or futures commission merchant.

Charles Schwab Media Productions Company and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.

Data contained herein is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. All events and times listed are subject to change without notice.