The major U.S. stock indices were trading lower in premarket action ahead of the CPI report. While the inflation data came in largely as expected, the underlying details were somewhat encouraging. Much of the increase in prices was driven by higher energy costs, while several key core components showed signs of moderation.
Following the release, investors initially focused on those softer underlying inflation trends. The S&P 500 and NASDAQ both moved into positive territory after the open, with the S&P rising as much as 9.9 points and the NASDAQ gaining as much as 47.17 points.
The tone changed dramatically later in the session after President Trump stated that the United States would continue its attacks on Iran. The comments sparked a shift in sentiment, with buyers turning into sellers as risk appetite faded. Stocks began to trend steadily lower throughout the day, with selling pressure accelerating into the close.
At the closing bell:
- Dow Jones Industrial Average: 49,924.00, down 953.10 points (-1.87%)
- S&P 500: 7,267.09, down 119.57 points (-1.62%)
- NASDAQ Composite: 25,169.50, down 509.32 points (-1.98%)
Adding to the pressure was continued rotation out of the technology and semiconductor sectors. Investors are preparing for a wave of large equity offerings, including the highly anticipated SpaceX IPO tomorrow, which is expected to raise approximately $75 billion. Anthropic and OpenAI are also expected to come to market in the months ahead. Last week, Alphabet added to the supply by raising $85 billion through a secondary offering.
Meanwhile, Super Micro Computer plunged by 28% after announcing plans to raise up to $7 billion in new equity as it works to expand capacity and meet growing demand for AI servers (brutal). The combination of rising capital needs, increased equity supply, and concerns over the escalating cost of building AI infrastructure continued to weigh on technology shares and the broader market.
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