Stocks Fall Ahead of CPI as US-Iran Truce Frays: Markets Wrap
(Bloomberg) — Technology stocks were set to lead US equities lower for a second day as tensions in the Middle East escalated and traders braced for a hot inflation report.
Nasdaq 100 futures dropped 1.6%, a day after investors rotated from highly valued chipmakers to economically sensitive sectors. Contracts on the S&P 500 fell 1.1%. Names tied to the buildout of artificial-intelligence infrastructure as well as miners were among the worst performers in premarket trading.
Oil swung from losses to gains after US President Donald Trump said Iran “will have to pay the price” for taking too long to negotiate a deal. In comments to Fox News, Trump said he was close to ordering new strikes. The threats came after a round of retaliatory attacks between the two sides.
Brent advanced 1.7% to $93 a barrel. Treasury yields climbed across the curve, with the 10-year rate up three basis points to 4.54%. The dollar held steady.
Tech stocks are turning volatile after an unprecedented rally as traders grapple with a growing list of risks. Expectations are rising that the Federal Reserve will need to raise interest rates to combat oil-driven price pressures, while a lineup of massive initial public offerings threatens to soak up investor cash.
Aside from the worsening situation in the Middle East, the focus will fall on Wednesday’s consumer price data for May, which is expected to show inflation at the highest level in more than three years. A $39 billion auction of 10-year Treasuries will also test demand at a time of steadily rising yields.
“Not only are we oscillating between deal or no deal with the US and Iran, but markets are also swinging between 1999-style AI exuberance and 2000-type tech crash fears,” noted Jim Reid at Deutsche Bank AG. “All we need now is a volatile US CPI print today to keep the pattern going.”
Economists surveyed by Bloomberg expect annual inflation to accelerate to 4.2% in May, the highest since April 2023, from 3.8% a month earlier. Core inflation, which excludes food and energy, is projected to edge up to 2.9% from 2.8%.
JPMorgan’s Market Intelligence desk said options were pricing in about a 1% move for the S&P 500 for the most likely core inflation print. Any upside shock above 0.35% could prompt the benchmark to fall by as much as 3%.
“Clearly, the AI-linked theme is seeing some unwind,” said Andrea Gabellone, head of global equities at KBC Securities. “It’s not structural, just temporary rotation away from high momentum names, and perhaps also linked to the several high-profile IPOs that are coming up.”
SpaceX’s IPO is set to price Thursday and trade the following day. The near-$75 billion offering has attracted demand from institutional investors for several times the shares available, according to people familiar with the matter.
“We currently see a healthy correction in parts of the market which might have moved too far, too fast,” said Stephan Kemper, chief investment strategist at BNP Paribas Wealth Management. “There’s also no trigger to further upgrade earnings expectations. We have a fair chance that the current choppy trading environment will stay in place for some time.”
Elsewhere, Bank of Japan Governor Kazuo Ueda has been hospitalized and is set to miss the monetary policy meeting next week, according to a statement. Investors are currently betting that the BOJ needs to raise rates soon to combat inflation and curb the yen’s weakness.
What Bloomberg Strategists Say:
“With US CPI the key event risk today, bonds and equities are likely to take direction together. Consensus forecasts imply inflation is unlikely to return anywhere close to target, leaving a high bar for markets to price a materially more dovish Fed.”
— Skylar Montgomery Koning, macro strategist. Click here for the analysis.
Corporate News:
Starbucks Corp. is considering options for its Japanese business including a stake sale, according to people familiar with the matter, following the disposal of a majority interest in its China operations. SoftBank Group Corp.’s talks with potential creditors to raise at least $6 billion from a margin loan backed by its OpenAI stake have stalled, people familiar with the matter said. Taiwan Semiconductor Manufacturing Co. reported a 30% rise in its monthly sales, reflecting continued strength in demand spurred by a global rush to build AI infrastructure. Some of the main moves in markets:
Stocks
S&P 500 futures fell 1.1% as of 7:48 a.m. New York time Nasdaq 100 futures fell 1.6% Futures on the Dow Jones Industrial Average fell 1% The Stoxx Europe 600 fell 0.5% The MSCI World Index fell 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1538 The British pound was little changed at $1.3381 The Japanese yen was little changed at 160.52 per dollar Cryptocurrencies
Bitcoin fell 1.8% to $61,008.32 Ether fell 2.3% to $1,621.32 Bonds
The yield on 10-year Treasuries advanced three basis points to 4.54% Germany’s 10-year yield advanced three basis points to 3.07% Britain’s 10-year yield advanced three basis points to 4.94% Commodities
West Texas Intermediate crude rose 2% to $89.94 a barrel Spot gold fell 2.5% to $4,154.17 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Neil Campling.
©2026 Bloomberg L.P.
