Dow's worst day since March, oil rose: inflation and Iran added to chip problems

Key indices of the U.S. stock market declined at the end of trading on Wednesday, June 10, with the Dow Jones Industrial Average falling the worst since the end of March. Investors fear a new round of escalation in the conflict between the U.S. and Iran after Donald Trump said that the negotiations were too long and threatened new strikes. In addition, inflation hit a three-year high. Oil prices jumped and gold prices fell to their lowest since the beginning of the year.

- The S&P 500 broad market index fell 1.62% on Wednesday. The index was at its lowest level in five weeks.

- The Dow Jones Industrial Average blue-chip index lost 953.33 points, or 1.87%, on June 10, its worst drop since March 27, when it fell 1.7%.

- The Nasdaq Composite Technology Sector Index collapsed nearly 2%.

- The Russell 2000 index of small and mid-capitalization companies fell 1.1%.

- The CBOE Volatility Index (VIX) was at 22.5 points by the close of trading. The psychologically important mark indicating high volatility of the market is considered to be 20 points.

- Brent crude futures rose 2.3% to $93.5 a barrel and WTI crude futures rose 2.6% to $90.5 a barrel.

- Gold fell 4.3% to $4080, hitting its lowest since the beginning of the year.

Major indexes hit session lows on Wednesday after US President Donald Trump promised new "very hard hits" on Iran. He said on the social media network Truth Social that Iran had "negotiated a deal for too long that would be very favorable to it." After Trump's threats, WTI crude oil futures jumped 3% to above $91 per barrel.

On June 10, shares of chip makers were again under pressure. Shares of chipmakers Micron Technology (-4.7%), Advanced Micro Devices (-4.9%), Broadcom (-5.1%) and Intel (-0.8%) were down for the fourth day out of the last five. The iShares Semiconductor ETF lost 3.7% on July 10.

Pressure is building on stocks ahead of SpaceX's IPO on Friday. Some traders believe that investors, especially private investors, are selling some of their most successful investments in chip makers to make room in their portfolios for securities of Elon Musk's space company, CNBC writes. Other analysts believe that the current decline is just profit taking after the rapid growth. Despite the correction, the iShares Semiconductor ETF is still up more than 80% since the beginning of the year.

In addition, several indicators at once, including Buffett's "favorite indicator," showed that the U.S. stock market is severely overheated.

Inflation in the U.S. in May updated the maximum for three years, which may affect further decisions of the Federal Reserve. Although the core CPI (Core CPI), which does not take into account the cost of food and energy, in May was slightly below expectations: rose by 0.2% for the month with a forecast of 0.3%, reports CNBC. In annual terms, core inflation amounted to 2.9%, which matched analysts' expectations, but remained above the Fed's target level of 2%. The overall consumer price index, which takes into account all categories of goods and services, exceeded the 4% mark in annualized terms for the first time in three years.

- "It's often two steps forward and one back, and recently we've taken three steps forward. A step backward in the hottest parts of the market, such as technology, which allows expectations and prices to re-set, is entirely expected and is good for the long-term sustainability of a bull market," Truist Advisory Services Investment Director Keith Lerner said as quoted by Bloomberg.

- "Investors were betting on a quick peace deal in the Middle East. The problem is that the longer a solution is sought, the more likely it is that oil prices will remain elevated. And the longer they stay high, the more persistent inflation could become," said eToro analyst Bret Kenwell (quoted by Bloomberg).

- "War with Iran is really going to have consequences. Either investors will be right that there's nothing to worry about, Trump will take care of everything, we'll get a deal with Iran and the [Strait of Hormuz] will open, but if not, apparently oil prices will have to go up a lot," said Argent Capital Management portfolio manager Jed Yellerbrock, quoted by CNBC.

This article was AI-translated and verified by a human editor