U.S. Stocks Close Tuesday in Red

(MENAFN) U.S. equities ended Tuesday's session on shaky ground as a hotter-than-forecast inflation reading collided with surging oil prices and deepening anxiety over the U.S.-Iran conflict, dragging the S&P 500 and Nasdaq into the red.

The benchmark S&P 500 shed 0.16%, or 11.88 points, settling at 7,400.96 — pulling back from an all-time high reached just a session earlier. The tech-dominated Nasdaq bore the brunt of the selloff, tumbling 0.71%, or 185.92 points, to close at 26,088.20, as a powerful rally in semiconductor stocks ran out of steam. The Dow Jones Industrial Average bucked the trend, edging up 0.11%, or 56.09 points, to finish at 49,760.56.

Despite widespread market unease, the Volatility Index (VIX) — widely known as Wall Street's "fear index" — eased 2.12% to 17.99.

Inflation Tops Forecasts, Fueling Rate Anxiety
Fresh price data added to investor discomfort. The Bureau of Labor Statistics reported that the consumer price index climbed 0.6% in April, pushing the annual inflation rate to 3.8% — surpassing economists' consensus estimate of 3.7% and marking the steepest year-over-year reading since May 2023. Although the monthly figure aligned with expectations, the annual overshoot was enough to rattle sentiment across trading floors.

Energy markets amplified the inflationary pressure. West Texas Intermediate crude soared 4.19% to $102.18 per barrel, while global benchmark Brent crude surged roughly 3%, breaching the $107 threshold.

Trump Rejects Iran Offer, Rattles Energy Markets
The spike in oil prices followed a sharp diplomatic breakdown. President Donald Trump dismissed Iran's most recent counterproposal to end the ongoing war, describing the month-long ceasefire between Washington and Tehran as "unbelievably weak" and "on massive life support."

Tehran's rejected offer reportedly encompassed demands for war reparations, full sovereignty over the Strait of Hormuz, the unfreezing of Iranian assets, and the removal of economic sanctions. With no resolution in sight, traders are bracing for sustained disruptions to global energy supply.

The confluence of elevated energy costs and geopolitical uncertainty has intensified scrutiny of inflation's grip on consumer spending — a critical engine that accounts for roughly two-thirds of the U.S. economy.

Chip Stocks Cool After Blistering Run
Technology shares, which had been the primary driver of recent market records, retreated sharply as profit-taking set in. Micron Technology — which had powered both the S&P 500 and Nasdaq to record territory on Monday following a staggering 37%-plus surge the prior week — fell more than 4% on Tuesday.

Advanced Micro Devices and Qualcomm also pulled back, declining approximately 3% and 11%, respectively. The pullback came despite AMD having gained more than 74% over the preceding month, and Qualcomm rallying more than 39% over the same stretch.

Senate Confirms Warsh to Fed Board
In a separate development with significant monetary policy implications, the U.S. Senate voted 51-45 on Tuesday to confirm Kevin Warsh to a 14-year term on the Federal Reserve Board of Governors — advancing President Trump's preferred candidate one step closer to leading the U.S. central bank.

On the fiscal front, the federal government recorded a budget surplus of $215 billion in April, though that figure represented a 17% decline compared with the same month a year earlier. Meanwhile, household debt in the U.S. climbed modestly in the first quarter of 2026, reaching $18.8 trillion, driven by rising mortgage and auto loan balances.

European Markets Also Sink
The selloff was not confined to American shores. Across the Atlantic, the pan-European Stoxx Europe 600 dropped 1.01% to close at 606.63.

Germany's DAX 40 led regional losses, plunging 1.62% to 23,954.93. Spain's IBEX 35 fell 1.56% to 17,573.60, and Italy's FTSE MIB declined 1.36% to 48,990.98. France's CAC 40 slipped 0.95% to 7,979.92, while the more resilient UK FTSE 100 dipped just 0.04% to 10,265.32.

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