US equity indexes traded mixed on Tuesday as a hotter-than-expected inflation print amid soaring gas prices restrained growth sectors, while the Iran stalemate continued.
The Nasdaq fell 0.7% to 26,088.20, and the S&P 500 declined 0.2% to 7,400.96. Both gauges ended off session lows. The Dow Jones Industrial Average rose 0.1% to 49,760.56, clawing back all declines from earlier in the day. Technology and consumer discretionary sectors led decliners. Health care and consumer staples were among the top gainers.
The US seasonally adjusted consumer price index jumped by 3.8% year-over-year in April from 3.3% in the prior month, according to data released Tuesday by the Bureau of Labor Statistics, compared with the 3.7% consensus. Core CPI, which excludes food and energy prices, climbed by 2.8% annually from 2.6%, versus expectations for 2.7%.
The CPI increased 0.6% month-over-month, as expected, following a 0.9% increase in March. Core CPI gained 0.4%, above the 0.3% consensus and 0.2% a month ago.
Gasoline prices rose a further 5.4% in April following a gain of more than 21% in March due primarily to the ongoing closure of the Strait of Hormuz, the choke point for about a fifth of global crude oil flows, according to a Jefferies note.
"Jointly in March/April the gasoline price rise equates to the largest two-month change [non-seasonally adjusted] on record with data back to 1935," David Doyle, head of economics at Macquarie, said in a note. "As we have been highlighting for some time, we see the next move as a hike with our baseline timing being in 1H27."
Federal Reserve Bank of Chicago President Austan Goolsbee said inflation readings show pervasive price pressures in the US economy and may even indicate overheating, Bloomberg News cited NPR.
"If you look at the components that are not energy, like services, if that is an indication that the underlying economy is overheating, then the Fed has got to be thinking about how do we break the chain of escalating inflation," Goolsbee was cited as saying Tuesday.
US Treasury yields jumped, with the 10-year up 5.1 basis points to 4.46%, the highest since about July. The two-year rate advanced 4.4 basis points to almost 3.99%, the strongest since June.
West Texas Intermediate crude oil futures surged 4.3% to $102.30, and Brent crude futures increased 3.3% to $107.68 as a faltering ceasefire between the US and Iran kept the Strait of Hormuz closed, continuing the largest-ever energy supply shock.
"Oil prices climbed ... as the global oil market continued to tighten amid limited prospects for a reopening of the Strait of Hormuz," Saxo Bank wrote in a note. "The move followed Trump casting doubt over a ceasefire, with Israel signalling the war is not over."
Britain said on Tuesday it would contribute autonomous mine-hunting equipment, Typhoon fighter jets, and the warship HMS Dragon to a multinational defensive mission aimed at securing shipping in the Strait of Hormuz, Reuters reported. Defence minister John Healey announced the commitment during a virtual summit with more than 40 of his counterparts from other nations involved in the mission, which he said would become operational when conditions allowed, the news report said
In precious metals, gold futures slipped 0.2% to $4,720.1, while silver futures climbed 1.5% to $87.19.