The S&P 500 Index (NYSE: SPY) closed down 1.62% on Wednesday, while the Dow Jones Industrial Average (NYSE: DIA) dropped 1.87% to a 2.5-week low.
The Nasdaq 100 Index (NASDAQ: QQQ) fell 1.98%, with June E-mini Nasdaq futures declining 2.07% as selling pressure intensified across technology sectors.
Escalating military conflict between the United States and Iran drove crude oil prices more than 2% higher, triggering broad losses across stocks and bonds.
The US said it had completed an operation in which fighter jets struck Iranian air defenses, ground control stations, and radar sites near the Strait of Hormuz in retaliation for Iran shooting down a US Apache helicopter.
Iran responded by launching missiles at four US military targets and firing drones at the main US naval base in Bahrain, also striking Ali Al Salem air base in Kuwait.
President Trump pledged further military action, declining to specify targets but stating: “We hit them hard yesterday, and we’re going to hit them hard again today.”
Rising tensions risk keeping the Strait of Hormuz closed and further tightening global energy supplies, adding to fears of sustained inflationary pressure on the global economy.
US May CPI rose 4.2% year-over-year, exactly in line with expectations and the fastest pace of increase in three years, while core CPI climbed 2.9% year-over-year.
Chipmakers led the market lower, with ON Semiconductor (NASDAQ: ON) and Qualcomm (NASDAQ: QCOM) each falling more than 6%, and Marvell Technology (NASDAQ: MRVL) and ARM Holdings (NASDAQ: ARM) dropping more than 5%.
Broadcom (NASDAQ: AVGO), Advanced Micro Devices (NASDAQ: AMD), and Micron Technology (NASDAQ: MU) all closed down more than 4% as the semiconductor sector bore the brunt of the selloff.
Among the Magnificent Seven, Nvidia (NASDAQ: NVDA) and Tesla (NASDAQ: TSLA) fell more than 3%, while Alphabet (NASDAQ: GOOGL), Amazon (NASDAQ: AMZN), and Meta Platforms (NASDAQ: META) each dropped more than 2%.
Apple (NASDAQ: AAPL) bucked the broader tech retreat, closing up 0.35% as the only Magnificent Seven member to finish in positive territory on Wednesday.
Airline and cruise stocks were hit hard as surging oil prices raised fuel cost concerns, with Alaska Air Group (NYSE: ALK) closing down more than 7% and United Airlines Holdings (NASDAQ: UAL) falling more than 6%.
Trucking companies faced additional sector-specific pressure after Amazon expanded its LTL freight offering to all US destinations, with FedEx Freight Holding Co (NYSE: FDXF) and Old Dominion Freight Line (NASDAQ: ODFL) each losing more than 5%.
Super Micro Computer (NASDAQ: SMCI) led S&P 500 decliners, crashing more than 27% after announcing plans for $7 billion in equity and equity-linked financing transactions to fund component purchases.
On the upside, Casey’s General Stores (NASDAQ: CASY) surged more than 20% to lead S&P 500 gainers after reporting Q4 revenue of $4.57 billion, well above the consensus estimate of $4.32 billion.
Cracker Barrel Old Country Store (NASDAQ: CBRL) jumped more than 22% after raising its full-year revenue forecast to between $3.27 billion and $3.30 billion, topping the consensus of $3.25 billion.
Energy producers gained as WTI crude oil surged, with Devon Energy (NYSE: DVN) closing up more than 5% and APA Corp (NASDAQ: APA) rising more than 3%.
Markets are currently pricing in just a 3% probability of a 25 basis point rate hike at the next FOMC meeting scheduled for June 16-17, while European swaps reflect a 99% chance of an ECB rate hike at its Thursday policy meeting.
