S&P 500, Nasdaq, Dow Drop As US-Iran War Jitters, Inflation Risk Spur Tech Selloffs - SMCI, AMZN, OPEN, SEGG, TSLA In Focus

• The S & P 500 and the Nasdaq 100 fell 1.6% and 2%, respectively, while the Dow Jones lost 1.9%.
• Super Micro (SMCI) shares dropped amid plans to raise $7 billion through equity offerings.
• Trump wrote on Truth Social that Iran had“taken too long to negotiate a deal...now they will have to pay the price!!!” 

U.S. stock indices dropped on Wednesday as renewed energy cost concerns tied to rising US-Iran war signals, along with signs of persistent inflation pressures, weighed on mega-cap technology stocks.

The S & P 500 fell 1.6%, Nasdaq lost 2% and the Dow Jones eased 1.9%. The Russell 2000, which tracks stocks with small market capitalizations, dropped 1.1%.

Among sectors, industrial stocks led declines as oil prices spiked, followed by weakness in tech, materials, consumer discretionary and financial stocks. Rising bets that inflation pressures leading to a rate hike this year have been acting as an overhang on technology shares.  

Among ETFs tracking benchmark indexes, the SPDR S & P 500 ETF (SPY) fell 1.7%, and Invesco QQQ Trust (QQQ) ended Wednesday around 2.3% lower, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) ended 2% lower. 

The VanEck Semiconductor ETF (SMH) dropped 4%. 

Meanwhile, retail sentiment on Stocktwits for SPY and DIA turned 'bearish' and was 'neutral' for QQQ. 

US Market Drivers

U.S. consumer inflation increased at its fastest pace in three years in May, boosted by surging energy prices due to the ongoing war in the Middle-East. The Consumer Price Index ​increased 4.2% in the 12 months through May, the third consecutive month of rise and the largest gain since April 2023, data from  Bureau of Labor Statistics showed.

"Americans are getting squeezed financially by inflation," Heather Long, chief economist at Navy Federal Credit ​Union told Reuters. "It's not just bad vibes about the economy now, there are real financial pressures, especially on middle-class and lower-income households." 

Early onWednesday, Trump said on Truth Social that Iran would pay the price for delaying negotiations.“...taken too long to negotiate a deal that would have been great for them, now they will have to pay the price!!!” 

Later, after market hours, in a post on X, CENTCOM said the U.S. military began“launching additional self-defense strikes today at 5:15 p.m. ET against multiple targets in Iran at the Commander in Chief's direction.” The strikes were“in response to Iran's unwarranted and continued aggression.” 

Oil prices rose after Trump's threats. West Texas Intermediate crude futures climbed 3% to top $91 a barrel, as per data from CNBC. 

“Either investors are going to be proven right, that [there's] nothing to worry about, Trump will take care of it, we'll get a deal with Iran and the strait will open up, but if not, it feels like oil prices are going to have to go up a lot,” Jed Ellerbroek, portfolio manager at Argent Capital Management told CNBC in an interview.  

Meanwhile, a host of retail investors are seeming to sell off some of their holdings in semiconductor and tech shares following a historic bull run to raise funds for upcoming SpaceX, OpenAI and Anthropic IPOs. 

“...beginning with the Google offering last week, the SpaceX IPO this week, and likely offers from Meta, OpenAI, and Anthropic, institutional and retail investors are likely raising funds to participate,” Mark Hackett of Nationwide told Bloomberg. 

 Trending Stocks To Watch 

Super Micro Computer (SMCI): Shares tanked 29% after the company announced an aggressive $7 billion financing package to fund its massive AI infrastructure order backlog. 

Amazon (AMZN): The company announced it has expanded its less-than-truckload shipping to all businesses as part of an expansion of services offered in its end-to-end logistics unit, Amazon Supply Chain Services. 

Opendoor Technologies (OPEN): The company's CEO announced that it is winding down its India operations and that the operational work it performs is best done closer to its customers in the U.S. 

Sports Entertainment Gaming Global Corporation (SEGG): Shares tumbled 15% after independent research firm White Diamond Research released a report accusing the small-cap company of having virtually no real business, almost no cash, and a pattern of issuing misleading press releases to inflate its stock price. 

Tesla (TSLA): The EV maker has“effectively” achieved Level 4 autonomy, according to Piper Sandler analyst Alexander Potter, who noted that skeptics often cite the greater number of robotaxis deployed by Alphabet Inc.'s (GOOG, GOOGL) Waymo. 

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