U.S. stocks opened lower Tuesday morning after a hotter-than-expected inflation report reignited concerns that price pressures are broadening across the economy, while a sharp jump in oil prices added to worries about consumer and corporate costs. The Dow Jones Industrial Average fell 89.93 points, or 0.18%, to 49,614.5 in early trading, while the Nasdaq Composite dropped 187.97 points, or 0.72%, to 26,086.2 and the S&P 500 lost 29.37 points, or 0.40%, to 7,383.47.
The April Consumer Price Index report from the U.S. Bureau of Labor Statistics showed inflation accelerated more than many investors expected. The CPI rose 0.6% in April after a 0.9% increase in March, while annual inflation climbed to 3.8% from 3.3% the prior month. Core inflation, which excludes food and energy, rose 0.4% monthly and 2.8% annually. The Labor Department said energy prices surged 3.8% during the month and accounted for more than 40% of the overall increase, while shelter costs also remained elevated with a 0.6% rise.
Markets reacted swiftly after the 8:30 a.m. ET release, with Treasury yields moving higher and technology shares coming under pressure as traders pushed back expectations for Federal Reserve rate cuts. Investors had entered the session already facing renewed inflation concerns tied to rising energy costs and transportation prices.
Oil prices intensified those concerns. June crude oil futures climbed $2.71, or 2.76%, to $100.78 per barrel in early trading, briefly topping $102 overnight as traders monitored global supply risks and stronger demand expectations. Meanwhile, the CBOE Volatility Index, or VIX, rose 0.30 points, or 1.63%, to 18.68, signaling a pickup in investor caution.
Technology and AI-related shares were among the weaker areas of the market after leading recent gains. Investors continued digesting a wave of earnings reports and positioning shifts tied to the artificial intelligence trade. According to an AInvest earnings roundup investors have increasingly rotated beneath the surface of the AI rally, with some high-growth technology names facing profit-taking even as broader earnings remain resilient.
Markets were also watching if the Iran war ceasefire holds and trade developments ahead of President Donald Trump’s departure for Beijing later today for talks with Chinese President Xi Jinping. Investors are closely monitoring discussions surrounding Taiwan, semiconductor policy, and rare earth supply chains, all of which could have major implications for AI infrastructure and chip stocks, according to AInvest reporting.