Wall St. falls as CPI and Iran tensions weigh down on sentiment

Wall Street's major indexes dipped a little?on Tuesday. The S&P 500, and the Nasdaq both pulled back from their record highs following a higher-than-expected inflation report and faded hopes for a quick?resolution of the Middle East conflict.

U.S. consumer price rose at a rapid pace for the second consecutive month in April. This pushed annual inflation to its highest levels in almost three years, and reinforced expectations that Federal Reserve would keep interest rates on hold for longer.

Last month, the Consumer Price Index rose 3.8% on an annualized basis. The economists surveyed by expected a rise of 3.7%.

Doug Beath is a global equity strategist at Wells Fargo Investment Institute. He said, "We think the financial markets are a bit slow to realize the damage being done by higher prices. "April saw the highest S&P 500 returns since 2020. Earnings continue to surpass expectations. "But I think that even though (CPI is) a little higher than expected, the fact that the negotiations are still in the limbo could make it more significant."

Despite a positive earnings season, the stalled talks between Washington and Tehran continue to be a source of concern for investors as rising oil prices fuel fears of inflation.

Donald Trump stated that a ceasefire between the United States and Iran is "on life support". This was after Tehran rejected the U.S. proposal to end the conflict. Oil prices have remained high as the Strait of Hormuz, the main shipping route through the Strait of Hormuz, remains closed.

CME Group's FedWatch Tool shows that traders expected two rate reductions before the war. However, they now expect the Federal Reserve will keep interest rates the same through the end the year.

Investors are now turning their attention to macroeconomic indicators as the earnings season for the first quarter draws to a close. This week, we will also get data on retail sales and producer prices.

The Dow Jones Industrial Average fell 297.98 points, or 0.60%, to 49.406.49. S&P?500 lost 43.98 points, or 0.57%, to 7,368.86. At 10:00 a.m. ET, the Dow Jones Industrial Average dropped 297.98, or 0.60% to 49,406.49. The S&P?500 fell 43.98, or 0.57% to 7,368.86. And the Nasdaq Composite fell 240.76, or 0.92% to 26,038.27.

Consumer discretionary stocks led the losses with a 1.1% drop.

The S&P 500, Nasdaq, and Dow Jones all closed at record highs on Monday. This was due to optimism about artificial intelligence, corporate earnings, and the S&P 500.

The technology sector, however, fell by 0.9% on Monday. Nvidia shares rose 1.7% while Intel shares fell 2%. Qualcomm?dropped by 6% following a record-high in the previous session.

Zebra Technologies, among other companies, jumped by 15% after the barcode scanner manufacturer raised its sales forecast for the year, betting on robust demand.

Hims & Hers Health fell 12.3% as the telehealth company missed Wall 'Street expectations for first-quarter revenues and reported a surprise 'loss.

Venture Global's shares rose by 4.7% after it raised its core profit forecast.

On the NYSE and Nasdaq, declining issues outnumbered advancing ones by a ratio of 3.14 to 1.

The S&P 500 recorded 8 new 52-week lows and 19 highs, while the Nasdaq Composite registered 32 new highs with 81 lows. Reporting by Ragini Mathematics and Utkarsh Hash in Bengaluru, Editing by Devika Syamnath

(source: Reuters)