The major averages finished lower today, with another abrupt reversal across technology stocks proving too much for the market to overcome despite opening strength that followed a relatively benign inflation report. Rising oil prices and renewed geopolitical concerns added to the pressure, sending the S&P 500 (-1.6%), Nasdaq Composite (-2.0%), and DJIA (-1.9%) sharply lower.

Stocks showed resilience at the open, as a somewhat better-than-feared May CPI report kept expectations for the Fed's policy path largely unchanged. Headline CPI rose 0.5% month-over-month (Briefing.com consensus 0.5%), while Core CPI increased 0.2% (Briefing.com consensus 0.3%). However, the year-over-year rate for both measures accelerated, with headline CPI reaching 4.2%, marking its first move above 4.0% in three years.

The major averages even spent some time in positive territory as technology stocks oscillated through a choppy opening stretch. The top-weighted information technology sector traded nearly 1% higher within the first hour of action. As they did yesterday, tech stocks eventually rolled over, charting a firmly lower course for the major averages.

The information technology sector (-2.0%) finished as one of the worst-performing S&P 500 sectors, with particular weakness once again coming from semiconductor and other AI-related names. The PHLX Semiconductor Index finished 3.6% lower, with Broadcom (AVGO 372.10, -20.06, -5.12%) a notable laggard among large chipmakers after partnering with Apollo Global Management (APO 131.14, -1.56, -1.18%)on an AI platform backed by an initial $35 billion commitment, while Taiwan Semiconductor Manufacturing (TSM 408.91, -19.01, -4.44%) suffered a similar loss despite reporting record May revenue.

Like the previous session's retreat, today's selloff came without a clear catalyst, suggesting that technology stocks may simply be working through a period of near-term profit-taking after an extended run higher. Some investors may also be raising cash ahead of Friday's highly anticipated SpaceX IPO.

Elsewhere in the technology sector, Super Micro Computer (SMCI 29.27, -11.37, -27.98%) was the worst-performing S&P 500 name after announcing a series of concurrent equity and equity-linked financing transactions totaling $7 billion.

Unlike yesterday's session, the major averages were left largely without support from the broader market, which was further pressured by rising oil prices. Crude oil futures settled today's session $1.77 higher (+2.0%) at $89.93 per barrel amid an escalation in hostilities between the U.S. and Iran, which included President Trump saying more military strikes are planned for today.

The industrials sector (-3.4%) finished with the widest loss, pressured by a variety of factors, including the spike in oil prices, which weighed heavily on airline stocks such as United Airlines (UAL 102.78, -6.85, -6.25%).

Elsewhere in the sector, Amazon's (AMZN 237.93, -6.26, -2.56%) expansion into the less-than-truckload space sent names such as FedEx Freight (FDXF 175.19, -13.27, -7.04%) and Old Dominion (ODFL 235.95, -12.78, -5.14%) sharply lower.

Additionally, electrical product names such as Generac (GNRC 239.11, -21.88, -8.38%), which have become increasingly linked to semiconductor performance, charted a lower course as tech pulled back.

The consumer discretionary sector (-2.2%) faced a similar combination of pressures, with cruise lines and other travel-related names retreating amid higher oil prices, while the pullback across tech included Tesla (TSLA 381.51, -15.17, -3.82%) and Amazon.

Meanwhile, the energy sector (+1.5%) unsurprisingly outperformed, while the consumer staples sector (+1.7%) also notched a solid gain as it extended yesterday's rotational strength. Casey's General (CASY 915.60, +154.42, +20.29%) was the best-performing S&P 500 name after topping earnings estimates, while J.M. Smucker (SJM 116.98, +4.59, +4.08%) extended its own post-earnings rally and Coca-Cola (KO 83.59, +2.25, +2.77%) traded to a new all-time high.

Overall, today's session reinforced the market's recent struggle to sustain upside momentum in technology stocks after an extended rally. Looking ahead, attention now turns to Oracle's (ORCL 201.26, -4.55, -2.21%) earnings after the close and Friday's highly anticipated SpaceX IPO as key catalysts that could further shape near-term sentiment.

U.S. Treasuries recorded slim midweek losses after spending another day inside a narrow trading range even though today's session saw the release of the May CPI report (0.5%; Briefing.com consensus 0.5%). Treasuries reached fresh lows in the early afternoon even though today's $39 bln 10-year note reopening was well received with foreign demand coming in firmly above average. The 2-year note yield settled up one basis point to 4.13%, and the 10-year note yield settled up one basis point to 4.54%. 

• Russell 2000: +14.3% YTD
• S&P Mid Cap 400: +11.2% YTD
• Nasdaq Composite: +8.3% YTD
• S&P 500: +6.2% YTD
• DJIA: +3.9% YTD

Reviewing today's data:

• Weekly MBA Mortgage Applications Index 10.8%; Prior -2.3%
• May CPI 0.5% (Briefing.com consensus 0.5%); Prior 0.6%, May Core CPI 0.2% (Briefing.com consensus 0.3%); Prior 0.4%
  • The key takeaway from the report is that core CPI was not as bad as feared, but that doesn't mean it was good. Core CPI is still running well above the Fed's 2.0% inflation target, so this report was by no means a game-changer in terms of the prevailing view that the Fed won't be cutting rates anytime soon.
• The Treasury Department reported a $292.6 billion deficit for May (Briefing.com consensus: $202.5 bln), which was $23 billion less than the deficit reported for May 2025. Receipts totaled $335.5 billion, while outlays reached $628.2 billion.
  
  • The key takeaway from the report, for some, will be the decline in customs duties, but even more important is the continued increase in the outlay for net interest ($107 billion), which was 47% more in May than the outlay for national defense.