NEW YORK: Wall Street’s major indexes extended declines on Wednesday, as technology stocks remained under pressure and renewed tensions between the United States and Iran overshadowed a tame inflation reading.
Volatility has picked up across stock markets in recent days, as investors contend with a widening array of risks, including high valuations in the tech sector, escalating Middle East tensions and expectations that the Federal Reserve may need to hike interest rates to curb inflation.
The CBOE Volatility Index rose 1.84 points to 21.73, after hitting its highest level since April 7 in the previous session.
US consumer prices increased 4.2 percent in the 12 months through May, the largest gain since April 2023, data showed, as the Middle East conflict raised the price of gasoline and other energy products.
The pace of increase was, however, in line with forecasts, as per a Reuters poll of economists.
“The data wasn’t as bad as expected, but the report is not anywhere near good. You’re still seeing inflation on the rise. That’s troublesome,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
The Federal Reserve is widely expected to hold interest rates at its June policy meeting. Investors are pricing in at least one 25 basis point rate hike by the end of the year.
Technology and AI stocks have borne the brunt of the selloff as investors priced in a tighter monetary policy and worried about stretched valuations in the sector.
Nvidia, Micron and Broadcom fell between 2.6 percent and 4.2 percent, extending losses after a brief rebound on Monday. The S&P 500 tech index was down 1.6 percent.
Super Micro Computer tumbled 17.7 percent after announcing plans to raise USD7 billion through a series of equity and equity-linked financing transactions to fund component purchases for its growing AI server demand.
The rotation out of highly subscribed technology shares has aided other areas of the markets that have lagged this year, including healthcare, real estate and consumer staples.
Five of 11 major S&P 500 sectors moved higher, with energy shares leading gains, as oil prices rose more than 1 percent.
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