Stocks weaken, oil spikes and gold slips – Firstpost

Global markets turned cautious as hotter-than-expected US inflation data, surging oil prices, and fading hopes of Federal Reserve rate cuts triggered a broad risk-off mood across equities, commodities and bonds.

Wall Street’s benchmark indices retreated from record highs, crude oil extended gains above the psychologically significant $100-per-barrel mark, while gold slipped as traders scaled back expectations of monetary easing by the US Federal Reserve.

The selloff came after fresh
US consumer price data showed inflation accelerating in April, driven largely by rising energy costs as disruptions in the Strait of Hormuz continued to squeeze global crude supplies amid the prolonged Iran conflict.

The Dow Jones Industrial Average managed to close marginally higher by 56.09 points, or 0.11 per cent, at 49,760.56, supported by gains in healthcare shares. However, the broader S&P 500 fell 11.88 points, or 0.16 per cent, to 7,400.96, while the tech-heavy Nasdaq Composite dropped 185.92 points, or 0.71 per cent, to 26,088.20.

Technology and consumer discretionary stocks led losses, with the Philadelphia Semiconductor Index tumbling 3 per cent despite remaining sharply higher for the year due to continued enthusiasm around artificial intelligence.

The market reaction followed data showing US consumer prices rising faster than economists had anticipated in April, marking the strongest increase since 2023. Higher fuel costs linked to the West Asia conflict have emerged as a key inflation driver, raising concerns that the Fed may not only delay rate cuts but could even consider rate hikes later this year.

According to CME’s FedWatch tool, traders are now pricing in a 30.5 per cent probability of a 25-basis-point rate hike by December, up sharply from 21.5 per cent a day earlier.

The inflation worries coincided with mounting geopolitical tensions after US President Donald Trump said the fragile US-Iran ceasefire was “on life support” following Tehran’s rejection of Washington’s latest proposal to end the conflict.

The ongoing war, now in its 11th week, has effectively shut the Strait of Hormuz, one of the world’s most critical energy shipping chokepoints. That has disrupted flows of crude oil, natural gas and refined fuels, fuelling fears of a broader global inflation shock.

Oil prices held firm after rallying more than 4 per cent in the previous session. West Texas Intermediate crude traded near $102 a barrel, while Brent crude settled above $107.

Satellite imagery cited by Bloomberg showed no ocean-going tankers near Iran’s Kharg Island export terminal for several days, signalling a possible prolonged halt in Iranian crude shipments for the first time since the conflict began.

The supply disruption has also pushed US gasoline prices to their highest level since 2022, adding political pressure on the White House ahead of crucial midterm elections later this year.

Despite the inflation backdrop traditionally supporting bullion as a hedge, gold prices weakened as rising bond yields reduced the appeal of non-interest-bearing assets.

Spot gold held near $4,718 an ounce after falling 0.4 per cent in the previous session. Analysts said traders are increasingly betting that persistently high inflation and elevated energy prices will prevent the Federal Reserve from cutting interest rates this year.

Higher rates typically strengthen the US dollar and Treasury yields, both of which tend to weigh on gold prices.

Among individual stocks, insurer Humana surged 7.7 per cent after Bernstein raised its price target by 36 per cent. Zebra Technologies jumped 11.4 per cent after increasing its annual sales growth forecast on expectations of robust automation demand.

On the downside, meme-stock favourite GameStop fell 3.5 per cent after eBay reportedly rejected its $56 billion takeover proposal. Telehealth company Hims & Hers Health tumbled 14.1 per cent after posting weaker-than-expected quarterly results and a surprise loss.

Trading volumes remained elevated, with nearly 19.63 billion shares changing hands on US exchanges, above the 20-day average of 18.08 billion shares, reflecting heightened investor nervousness over inflation and geopolitical risks.

Attention is now turning to Trump’s upcoming visit to Beijing, where he is expected to meet Chinese President Xi Jinping to discuss tariffs, rare earth trade, Taiwan and China’s possible role in brokering peace with Iran.