U.S. stock futures slipped on Wednesday as investors waited for the May CPI data and digested a fresh escalation between Washington and Tehran, with technology shares leading the pullback before the inflation reading was due at 8:30 a.m. ET.
Nasdaq 100 futures fell 1.7%, S&P 500 futures dropped 1.2% and Dow Jones Industrial Average futures were down around 1%, a move that showed how tightly traders were tied to the morning inflation release. Economists expected the report to show prices rose 4.2% from a year earlier, which would be the hottest annual reading in more than three years and could push bets higher on an interest-rate hike later this year if the data comes in hot.
Donald Trump added to the pressure overnight, posting twice to say Iran had taken too long to negotiate and would have to pay the price. The remarks came as the United States and Iran traded strikes after a U.S. Apache helicopter was downed on Monday near the Strait of Hormuz, a narrow waterway that has long been central to oil flows and geopolitical risk.
The military exchanges moved from rhetoric to action quickly. U.S. Central Command said it launched airstrikes within Iran on Tuesday targeting air defense, ground control stations and surveillance radar sites, while Iran acknowledged strikes around Bandar Abbas and Qeshm Island inside the Strait of Hormuz. Central Command described the operation as a proportional response to recent attacks on U.S. forces and international commercial ships transiting regional waters.
That confrontation matters to markets because it is lifting crude at the same time inflation is under scrutiny. Brent oil rose nearly 2% to $93 per barrel and WTI hovered just below $90 per barrel, a jump that can feed through to gasoline and shipping costs just as investors are trying to decide whether price pressures are cooling or reaccelerating.
For now, the next market-moving step is already fixed on the clock: the May CPI report at 8:30 a.m. ET. If it lands hotter than expected, growth stocks could face another round of selling and the debate over how far the Federal Reserve can go this year will only get sharper.
