A retreat in US stock futures picked up pace on Wednesday in the wait for the latest inflation reading, as investors assessed the impact of US-Iran military clashes on odds for a peace plan.
Nasdaq 100 futures (NQ=F) led the pullback, down 1.2% as Tuesday’s sell-off in tech stocks deepened. S&P 500 futures (ES=F) sank 0.8%, while those on the Dow Jones Industrial Average (YM=F) fell 0.7%.
Techs look set for another bruising as the rotation out of the AI trade continues, as concerns around OpenAI (OPAI.PVT) and Anthropic’s (ANTH.PVT) mega-IPOs build.
Focus is now on the May’s CPI report, which will add to the pressure on growth stocks if the consumer inflation reading comes in hot as expected.
The data, set for release at 8:30 a.m. ET, is forecast to show prices rose 4.2% since last May. That would be the hottest annual reading in over three years, and would likely boost bets on an interest-rate hike landing this year.
It should also provide insight into whether the protracted war with Iran might force the Federal Reserve to hike rates, as rising energy costs feed into higher prices.
Tensions between the US and Iran ramped back up, with the two sides trading strikes overnight after a US Apache helicopter was downed on Monday near the Strait of Hormuz. Oil prices fell, erasing initial gains in choppy trading as investors appeared to shrug off the risks.
On Wednesday after the bell, Oracle (ORCL) is set to report its earnings results. Investors will pay attention to the details of the company’s cloud business, which counts OpenAI as a customer, amid fluctuations in the AI trade.
The main event of the week lands Friday, with the expected IPO of Elon Musk’s SpaceX (SPCX). The company’s debut is expected to mark the largest public offering in history.
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Oracle (ORCL) is set to post results for its most recent quarter against a background of faltering faith in the AI trade underpinning hopes for the Silicon Valley veteran.
Yahoo Finance’s Daniel Howley lays out what to watch:
Oracle will report its fourth quarter earnings after the bell on Wednesday, amid recent AI trade fluctuations and as Anthropic (ANTH.PVT) and OpenAI (OPAI.PVT) set up their initial public offerings.
The cloud services and infrastructure provider counts OpenAI among its most important customers.
The Sam Altman-helmed AI startup signed a $300 billion, five-year deal with Oracle in 2025, which serves as the linchpin of its AI efforts.
For the fourth quarter, Oracle is expected to report earnings per share (EPS) of $1.97 on revenue of $19 billion, according to a Bloomberg analyst consensus.
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Bloomberg reports:
Gold (GC=F) extended a decline after the US launched strikes against Iran in retaliation for the downing of a military helicopter, jeopardizing efforts to end the war that’s roiled global markets and raised inflation risks.
Bullion fell as much as 2.1% to around $4,173 an ounce on Wednesday, having slid 1.6% in the previous session. American forces struck Iranian sites near the Strait of Hormuz after President Donald Trump blamed Tehran for shooting down a US helicopter off the coast of Oman. Iran’s Mehr news agency reported that several explosions were heard on Qeshm Island and along the country’s southern coast.
The latest clashes threaten a fragile ceasefire and risk extending the near-total closure of Hormuz, a vital transit point for energy shipments from the Middle East to global markets. Iranian Foreign Minister Abbas Araghchi said in a post on X that the country “will leave no attack or threat unanswered” and the Islamic Republic later launched a drone strike on the US Fifth Fleet in Bahrain, state-run IRIB News reported.
Gold is about a fifth below where it was trading before the Iran war broke out at the end of February. The metal’s recent decline through its 200-day moving average — a widely watched measure of long-term momentum — has triggered additional selling as it’s seen as an important level watched by institutional investors.
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Bloomberg reports:
Oil rebounded after the US launched fresh strikes against Iran following the downing of an American helicopter, posing a new threat to a fragile truce that’s been tested by recent attacks in the Middle East.
Brent (BZ=F) crude climbed as much as 2% to trade above $93 a barrel, while West Texas Intermediate (CL=F) rallied to $90. Both benchmarks slumped in the previous session. The “self-defense strikes” on Iran were conducted under President Donald Trump’s direction in response to an Apache helicopter being shot down off Oman, US Central Command said in a brief statement.
“The mission is a proportional response to unjustified Iranian aggression,” Centcom said on X. Iran’s state-run IRIB reported that Qeshm Island in the Strait of Hormuz had been struck, with at least six explosions, along with strikes in the Jask region near the narrow waterway.
The fresh US strikes imperil the stability of a shaky ceasefire in the region and negotiations for a more lasting accord between the warring parties. Trump has repeatedly said that peace talks are on track, after a flare-up earlier in the week saw Israel and Iran exchange attacks.
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