U.S. inflation data for May was due before the opening bell Wednesday, and traders were bracing for a reading of 4.2% that would mark a third straight monthly increase. The timing mattered because markets were already sliding as a fresh surge in oil prices and the U.S. military’s attacks against Iran added another layer of pressure.
Before the report, S&P 500 futures fell 1.1%, Dow Jones Industrial Average futures slipped by less than one percent and Nasdaq futures dropped 1.6%. The sell-off was broad enough to reach some of the biggest names in technology, with Micron down 4.2% before the bell, Super Micro Computer tumbling nearly 12% and Nvidia sliding 2.5% overnight.
Warren Patterson, who wrote Wednesday that the situation remains highly volatile, captured the mood in markets that were moving on more than one shock at once. Brent crude rose $1.67 to $93.12 per barrel, while benchmark U.S. crude gained $1.89 to $90.09 per barrel, extending a climb that had already pushed prices far above the roughly $70 a barrel level seen in late February before the war began.
That inflation reading was being watched not just for the number itself but for what it said about the path ahead. If May matched expectations, it would be the third month in a row of higher prices, a problem coming just as the S&P 500 was already coming off its first losing week in 10. Investors were also digesting heavy selling in artificial intelligence-related stocks, adding to the sense that the market was losing its footing on several fronts at once.
The move in energy was tied directly to the latest military escalation, and traders had little sign that the pressure on supply would ease quickly. With prospects for fully reopening the Strait of Hormuz still in doubt, the market was left to weigh higher fuel costs against a fragile outlook for inflation. The actual May reading, once the Labor Department released it, would show whether prices were still accelerating even as oil, stocks and geopolitics were all moving in the same direction.
