Key facts
- The Nasdaq Composite index fell 3% amid a renewed sell-off in technology stocks.
- US equities retreated, with the S&P 500 down 0.9% and the Dow Jones Industrial Average down 1.1%.
- Investor sentiment was impacted by concerns over AI stock valuations, Middle East tensions, and potential for prolonged tight monetary policy.
- Super Micro Computer plunged 14.2% following its announcement of a $7 billion equity offering.
- Defensive sectors like healthcare and consumer staples saw gains, while energy shares rose.
- US consumer prices rose 4.2% in May, matching expectations and largely attributed to higher fuel costs.
US equities retreated on Wednesday as technology shares faced renewed selling pressure and geopolitical uncertainty in the Middle East heightened investor caution. The Nasdaq Composite index dropped 3%, marking an intensification of the sell-off in tech stocks.
Major indices traded lower, with the Dow Jones Industrial Average down 1.1% and the S&P 500 declining 0.9%. Technology and AI-related stocks remained under pressure as investors reassessed valuation levels in a higher interest-rate environment. Nvidia, Broadcom, and Micron Technology fell between 1% and 3.8%, contributing to a 1.1% drop in the S&P 500 technology index.
Super Micro Computer plunged 14.2% after announcing plans to raise $7 billion through equity and equity-linked offerings to support its AI server business. The weakness in technology shares triggered a rotation into defensive sectors, with healthcare, real estate, and consumer staples stocks advancing. Energy shares gained more than 1% as crude oil prices moved higher.
Geopolitical concerns also remained in focus after US President Donald Trump commented on Iran's delay in negotiations, while Tehran indicated it would reassess diplomatic engagement. US consumer prices rose 4.2% in May from a year earlier, largely due to higher fuel and energy costs linked to the Middle East conflict, though the reading was in line with economists' expectations. Markets widely expect the Federal Reserve to leave rates on hold in June, but traders continue to price in at least one 25 basis-point rate hike by the end of the year.
In other market movements, trucking companies XPO, JB Hunt, and Old Dominion Freight Line fell between 2.5% and 6.2% after Amazon expanded its less-than-truckload freight business in the US. Market breadth remained weak, with declining stocks outnumbering advancing shares on both the New York Stock Exchange and the Nasdaq.