US stocks closed mixed on Tuesday as a selloff in semiconductor shares and rising oil prices pressured technology-heavy indexes following a hotter-than-expected inflation report for April.
The S&P 500 slipped 0.16% to close at 7,400.96, while the Nasdaq Composite fell 0.71% to 26,088.20.
The Dow Jones Industrial Average outperformed, rising 56.09 points, or 0.11%, to finish at 49,760.56.
Markets retreated from recent record highs as investors reassessed expectations for interest-rate cuts amid persistent inflation pressures linked to rising energy costs and continued geopolitical tensions surrounding the Iran conflict.
Chip stocks retreat after massive rally
Semiconductor shares led the market decline after an extended rally fueled by enthusiasm surrounding artificial intelligence infrastructure spending.
Micron Technology fell 3.6%, reversing course after helping push the S&P 500 and Nasdaq to record highs on Monday.
The stock had surged more than 37% last week and roughly 53% over the past month during the latest memory-chip rally.
Advanced Micro Devices declined 2%, while Qualcomm dropped 11%.
AMD had gained more than 74% in April, while Qualcomm rose over 39% during the same period.
A broader semiconductor index fell 3% as investors rotated out of some of the market’s biggest winners following a nearly 70% rally in chipmakers over the previous six weeks.
Analysts said the sector’s sharp gains left valuations vulnerable to profit-taking, especially as inflation concerns re-emerged.
The latest pullback came as investors weighed whether continued AI-driven spending can offset growing macroeconomic risks tied to higher interest rates and elevated energy prices.
Inflation and oil prices pressure markets
Investor sentiment weakened further after April inflation data came in above expectations.
The consumer price index rose 0.6% in April, pushing the annual inflation rate to 3.8%, according to the Bureau of Labor Statistics.
Economists surveyed by Dow Jones had expected a 3.7% annual increase.
Core inflation, which excludes food and energy prices, also remained elevated at 2.8%.
At the same time, oil prices extended gains as hopes for a ceasefire between the US and Iran continued to fade.
West Texas Intermediate crude rose 4.19% to settle at $102.18 per barrel, while Brent crude gained 3.42% to close at $107.77.
President Donald Trump described negotiations with Iran as “unbelievably weak” and “on massive life support” after rejecting Tehran’s latest counterproposal.
Iran reportedly demanded war reparations, sanctions relief, the release of frozen assets, and full sovereignty over the Strait of Hormuz as part of any agreement.
Fed outlook and global tensions remain in focus
Rising inflation and energy costs also reshaped expectations for Federal Reserve policy.
Renewed inflation concerns pushed Treasury yields higher, while traders increased bets that the Fed may keep rates elevated for longer or potentially consider additional tightening in 2027.
On the geopolitical front, Trump said trade discussions would dominate his upcoming summit with Chinese President Xi Jinping, while downplaying the importance of Iran-related talks during the meeting.
Corporate movers outside the technology sector included Wendy’s, which rose after reports that Trian Fund Management was seeking investor support for a potential take-private bid, while Under Armour declined after issuing weaker-than-expected guidance.
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