US stocks fell on Tuesday after a hotter-than-expected inflation report showed price pressures were still running firm, with the Nasdaq Composite down roughly 1.2%, the S&P 500 off 0.7% and the Dow Jones Industrial Average lower by 0.6%.
The April Consumer Price Index showed core price growth above expectations, while annual headline consumer inflation came in at 3.8%, the largest increase since May 2023. Core inflation rose 2.8% from a year earlier. The move came after the S&P 500 and Nasdaq had just set record closing highs, leaving investors with little room for disappointment as they digested the latest read on inflation. A separate Cpi Report Today: Stocks Slip as April Inflation Comes in Hot look captured the same mood as traders reset bets on how long price pressure will stick around.
Energy added to the unease. West Texas Intermediate crude was up 3.3% to over $101 a barrel on Tuesday morning, while Brent crude futures rose 3.3% to above $107 a barrel. Oil prices were rising amid the Strait of Hormuz blockade and pressure on global fuel and energy prices, a backdrop that has kept markets on edge as tensions between the United States and Iran escalate. Silver futures were down on Tuesday morning, even after climbing 17% over the past week, while gold futures also slipped after a 3% weekly gain.
There was another drag under the headline inflation data: workers were still losing ground in real terms. Real average hourly earnings fell 0.3% year-on-year in April, and real average weekly earnings declined 0.2%. That came after Friday’s stronger-than-expected jobs report, which had already raised the risk that the Federal Reserve would have to stay cautious longer than investors wanted. The same mix of sticky prices and resilient labor data framed Inflation test looms as stocks dip, oil jumps and Trump heads to China, where traders were also watching the oil market and geopolitics.
President Trump added a separate source of market tension, saying the US-Iran ceasefire agreement was on “massive life support” as he prepared to begin a trip to China on Tuesday. He invited 16 top executives, including Tesla CEO Elon Musk and Apple CEO Tim Cook, to join him during the visit. For investors, that leaves two live tests at once: whether inflation cools fast enough to preserve the rally in stocks, and whether the jump in energy prices becomes the next reason markets stay defensive. Dividend names such as Procter & Gamble, Realty Income and Coca-Cola may draw fresh attention if traders keep looking for steadier ground, but Tuesday’s session made clear that the easy part of the rally is over.
