Dow falls 334 points as chip selloff, Iran tensions hit stocks

• Semiconductor stocks extended losses with the sector ETF down after a 10% plunge on Friday, though still up 82% year-to-date; some investors cite profit-taking and capital rotation ahead of SpaceX's $75 billion IPO expected Friday
• Iran tensions escalated after a reported US Army Apache helicopter downing near the Strait of Hormuz, with President Trump warning Iran will 'pay the price'; WTI crude rose ~2% to $90/barrel and Brent traded above $92
• Inflation rose 0.3% monthly and matched forecasts at the fastest annual pace since April 2023; markets continue pricing at least one quarter-point Fed rate hike before year-end despite June pause expectations

Market Summary: Dow Falls on Chip Selloff and Iran Tensions

Key Market Movements:

US equities declined Wednesday with the Dow Jones Industrial Average falling 334 points, the S&P 500 down 0.57%, and the Nasdaq Composite dropping 0.82%. Technology stocks, particularly semiconductors, led the decline.

Semiconductor Sector Under Pressure:

The semiconductor ETF (SOXX) continued its selloff after falling 10% on Friday. Despite the recent weakness, SOXX remains up over 82% year-to-date. Market participants attribute the decline to profit-taking following the AI-driven rally, stretched valuations, and potential capital reallocation ahead of SpaceX's Friday IPO, which targets a $75 billion raise at a $1.75 trillion valuation.

Geopolitical Tensions:

Escalating US-Iran tensions significantly impacted markets after President Trump warned Iran would "pay the price" following the reported downing of a US Army Apache helicopter near the Strait of Hormuz. Oil prices surged approximately 2%, with West Texas Intermediate trading near $90 per barrel and Brent crude above $92.

Inflation Data:

May inflation data showed the fastest annual increase since April 2023, matching economist forecasts. Core inflation rose 0.2% monthly, slightly below expectations. The data provided limited relief, with CME FedWatch indicating markets expect unchanged rates at June's Federal Reserve meeting but anticipate at least one quarter-point increase before year-end.

Individual Stock Movers:

Super Micro Computer declined despite announcing a $7 billion fundraise for AI server expansion. Nike fell on an RBC downgrade, while trucking companies (XPO, J.B. Hunt, Old Dominion) dropped after Amazon announced freight services expansion.

Market Implications:

The combination of geopolitical risk, sector rotation pressure, and persistent inflation concerns suggests continued volatility ahead, particularly for high-valuation technology stocks.