Major United States benchmarks finished mixed on Tuesday (Wednesday AEST) as investors weighed a hotter-than-expected inflation report, rising oil prices and renewed uncertainty surrounding the fragile U.S.-Iran ceasefire near the end of a strong first-quarter earnings season.
The Dow Jones Industrial Average rose 56.1 points, or 0.1%, to 49,760.6, while the S&P 500 fell 11.9 points, or 0.2%, to 7,401.0. The Nasdaq Composite underperformed, shedding 185.9 points, or 0.7%, to close at 26,088.2.
Investor sentiment weakened after tensions in the Middle East escalated further. The Iran war, now in its 11th week, showed little sign of nearing a resolution after U.S. President Donald Trump said the ceasefire agreement was on “life support”.
The deteriorating geopolitical backdrop pushed energy prices sharply higher amid ongoing concerns over crude supply disruptions linked to the closure of the Strait of Hormuz.
Brent crude settled up 3.42% at US$107.77 a barrel, while West Texas Intermediate futures climbed 4.19% to settle at $102.18 per barrel.
Markets are also closely watching Trump’s upcoming visit to Beijing later this week, where he is expected to meet Chinese President Xi Jinping.
Discussions are anticipated to focus on tariffs, U.S. military aid to Taiwan, China’s potential role in helping broker peace negotiations with Iran and an extension of a trade agreement covering critical rare earth metals.
Economic data released during the session added to investor caution after consumer prices increased faster than expected in April.
According to the Bureau of Labor Statistics (BLS), the consumer price index (CPI) rose 0.6% during the month, lifting the annual inflation rate to 3.8%, the highest level recorded since May 2023.
While the monthly rise matched analyst forecasts, annual inflation came in slightly higher than the 3.7% expected.
The stronger inflation reading prompted traders to reassess the outlook for U.S. interest rates, with expectations growing that the Federal Reserve may need to tighten policy again later this year.
Financial markets are now pricing in a 30.5% chance of a 25-basis-point rate increase in December, according to the CME Group FedWatch Tool, up from 21.5% on Monday.
Among individual companies, health insurer Humana advanced 7.7% after Bernstein raised its price target on the stock by 36%.
Video game retailer GameStop slipped 3.5% after eBay rejected the company’s proposed $56 billion takeover bid.
Barcode scanner manufacturer Zebra Technologies surged 11.4% after lifting its annual sales growth forecast on expectations for continued strong demand for automation products used in manufacturing workflows.
Telehealth provider Hims & Hers Health plunged 14.1% after missing Wall Street estimates for first-quarter revenue and reporting a surprise quarterly loss.
Meanwhile, LNG exporter Venture Global rallied 14.2% after raising its annual adjusted core profit forecast.
On the bond markets, U.S. Treasury yields moved higher, with the benchmark 10-year yield rising 1.2% to 4.463%, while the two-year yield gained 1.1% to 3.994%.
