Dow slips 150 points as hot inflation, oil surge hit Wall Street

• April CPI rose 0.6% monthly and 3.8% annually, the highest rate since May 2023, exceeding expectations and driven by energy price increases tied to Middle East tensions
• WTI crude climbed above $100 per barrel and Brent topped $107 after Trump said the US-Iran ceasefire was 'on life support,' keeping the Strait of Hormuz supply disruption risk elevated
• Markets now expect the Fed to hold rates unchanged through year-end, abandoning prior expectations for two rate cuts in 2026, while AI semiconductor stocks like Micron and Intel pulled back after recent rallies

Market Summary: Dow Slips on Hot Inflation and Oil Surge

Market Performance:

U.S. markets opened lower Tuesday with the Dow Jones falling 156 points, the S&P 500 declining 0.39%, and the Nasdaq dropping 0.66%. This reversed Monday's record-setting session that saw the S&P 500 and Nasdaq reach all-time highs.

Inflation Data:

April's Consumer Price Index (CPI) showed inflation accelerating to 3.8% year-over-year, the highest rate since May 2023, exceeding the 3.7% forecast. Monthly CPI rose 0.6%, primarily driven by elevated energy prices linked to geopolitical tensions.

Federal Reserve Implications:

The hot inflation reading has effectively eliminated expectations for rate cuts in 2026. According to CME Group's FedWatch Tool, markets now anticipate the Fed will maintain current rates through year-end, marking a significant shift from previous expectations of two cuts.

Geopolitical Tensions:

President Trump declared the U.S.-Iran ceasefire "on life support" after Iran rejected peace proposals and countered with demands including war reparations, asset releases, sanctions relief, and Strait of Hormuz sovereignty. The strategically critical waterway remains largely closed, disrupting global oil supply.

Oil Markets:

WTI crude climbed above $100 per barrel (up 2%), while Brent crude exceeded $107 (up 3%), extending Monday's rally and raising concerns about sustained supply disruptions impacting consumer spending and inflation.

Sector Movements:

The semiconductor rally cooled as Micron Technology fell 3.6% and Intel declined 4.8% following recent sharp gains. Hims & Hers plunged after missing revenue estimates, while Venture Global rose 8% on improved profit forecasts.

Outlook:

Investors await upcoming producer price index and retail sales data for further clarity on energy costs' impact on the broader economy.