By Connor Smith
No More Momentum. The Nasdaq Composite tumbled again today after the latest inflation reading and higher oil prices failed to stop the bleeding.
The tech-heavy index dropped 2%. The Dow Jones Industrial Average fell 953 points, or 1.9%. The S&P 500 closed 1.6% lower.
Chips were at the heart of the downturn, with the iShares Semiconductor ETF sinking another 3.7%, putting the chip stock benchmark 12% off its June 3 closing high. Part of the losses are due to the fact that Wall Street is ditching momentum plays this month, after aggressively chasing them in April and May.
A recent wave of worries about AI spending that has weighed on the chip sector is also now spreading to other parts of the market that benefitted from billions in data center buildout spending. Industrials were the biggest laggard on Wednesday, dragged down by a swirl of other factors including rising oil prices, and expectations of a Fed interest rate hike. The consumer price index for May didn't help much either.
"At this point our assumption is this is still a positioning unwind, not a regime change, but we don't think it has fully run its course," writes Jonathan Krinsky, BTIG's chief market technician. "As a result, we would suggest you remain seated with your seat belts fastened, as we expect more near-term turbulence."
The Russell 2000 held up better than the big three indexes, but even the small-cap index ended the day down more than 1%. Truist Chief Investment Officer Keith Lerner thinks smaller stocks could act as a hedge against "sharp tech-led rotations." The Russell was briefly higher until the selloff spread to other parts of the market.
"Under the surface, recent weakness has been more about rotation than a broad-based selloff," writes Lerner. "Expect a choppier path through the summer and into midterm election season. Still, the bull market deserves the benefit of the doubt, and pullbacks toward support levels would be viewed as an opportunity for underweight investors."
Oracle's earnings report after the bell don't look promising for the markets tomorrow: Shares of the cloud platform provider were down sharply in the wake of a mixed earnings report this evening.
The Hot Stock: Casey's General Stores +20.2% The Biggest Loser: Super Micro Computer -28.0%
Best Sector: Consumer Staples +1.7% Worst Sector: Industrials -3.4%
Annual or Monthly?
Believe it or not, Wall Street's initial reaction to today's CPI reading was fairly positive. Stock futures perked up slightly, and the S&P 500 and Nasdaq both rose early in the session before the selloff took hold.
As we often say in markets, though, the first move isn't always the right one, and the May inflation report offered a lot for traders to digest. It wasn't the main drive of market activity today, but it didn't boost stocks either.
Core CPI, which excludes volatile food and energy prices, was either in line or cooler than economist expectations, depending on whether you looked at the monthly or annual rate increase. The core CPI's 0.2% monthly increase in May also represented a cooldown from a 0.4% uptick in April.
But the headline CPI number, with 4.2% annual uptick, is well above the Fed's 2% target for inflation. My colleague Megan Leonhardt writes that while the CPI may have hit its peak in this latest reading, and gas prices are beginning to even out, that doesn't mean things are easing anytime soon.
The longer the Strait of Hormuz remains bottlenecked and supply chains across the globe are disrupted, the broader and more persistent inflation could become.
The next few months will decide what the Fed will do next. As it stands, the chances of a rate hike at the June and July FOMC meetings is less than 4%, according to CME FedWatch. Another big inflation gauge, the producer price index for May, is due out tomorrow morning at 8:30 a.m. ET.
You can read Megan's latest coverage on this week's inflation numbers here.
The Calendar
Adobe and Lennar report quarterly results tomorrow.
The Bureau of Labor Statistics releases the producer price index for May. The consensus calls are for a 6.4% annualized increase in the PPI and a 5.4% rise in the core PPI. This compares with gains of 6% and 5.2%, respectively, in April.
The European Central Bank announces its monetary-policy decision. The ECB is widely expected to raise its key short-term interest rate from 2% to 2.25%.
SpaceX is expected to price its initial public offering at $135 a share on Thursday, raising $75 billion, and valuing the company at about $1.8 trillion. Shares of SpaceX would then begin trading on the Nasdaq exchange on Friday.
-- Dan Lam
What We're Reading Today
-- Why Princeton Is Reversing Its Choice to Divest From Fossil Fuels
-- Oracle Stock Slides on Mixed Earnings. Software Is an Issue.
-- The SpaceX Order Book Closes Today. What We Know About Demand for the
IPO.
-- Micron Stock Drops Again But This Powerful Catalyst Can Reignite Rally
-- Hollywood Faces New Horror: Gen Z Directors Famous for YouTube
-- There's More to Infrastructure Investing Than Data Centers. 11 Ways to
Diversify.
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(END) Dow Jones Newswires
June 10, 2026 19:55 ET (23:55 GMT)
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