US stock futures are experiencing a decline, reflecting investor caution amidst rising geopolitical tensions and anticipated inflation data. The S&P 500 futures were down 0.91%, Nasdaq 100 futures lost 1.32%, and Dow Jones Industrial Average futures indicated a 0.9% opening decline, equivalent to about 449 points. These drops are attributed to President Trump's threats of further military action against Iran, following US forces striking targets in Iran in retaliation for the downing of a US Army Apache helicopter over the Strait of Hormuz.
Adding to market pressures, the Consumer Price Index (CPI) rose by 4.2% over the 12 months ending in May, the highest annual inflation rate since April 2023, and up from 3.8% in April. This acceleration in inflation is partly due to the Iran conflict pushing up energy prices. West Texas Intermediate crude futures rose approximately 1.4% to around $89.37 a barrel, and Brent crude futures climbed about 1% to over $92 a barrel.
Chip stocks were significantly impacted, with the iShares Semiconductor ETF sliding 2.6% before the open. Micron Technology, AMD, and Broadcom all traded in the red, marking the fourth losing session in five for the group, which included a sharp 10% single-day drop last Friday. Despite the recent downturn, the ETF still holds an impressive gain of over 86% on the year. Investors are also closely watching corporate earnings reports from AI-related companies such as Applied Materials, Cisco, and CoreWeave, expected this week.
Market sentiment is also influenced by the upcoming SpaceX IPO, which is expected to be the largest public offering on record. Some market participants suggest that retail investors are rotating out of semiconductor stocks to free up capital for this debut. An alternative explanation for the chip stock slide is simply normal selling pressure after an unusually sharp rally. Oracle is also trending ahead of its fiscal Q4 earnings release, with investors focusing on its cloud infrastructure growth.
