US stocks: S&P 500, Nasdaq open lower after April inflation data; Middle East in focus

Published Tue, May 12, 2026 · 09:54 PM — Updated Tue, May 12, 2026 · 10:08 PM

THE S&P 500 and the Nasdaq opened lower on Tuesday, as investors weighed a hotter-than-expected inflation report and fading hopes for a swift resolution to the Middle East conflict.

US consumer prices rose at a brisk pace for a second straight month in April, pushing annual inflation to its highest level in nearly three years and reinforcing expectations that the Federal Reserve will keep interest rates unchanged for longer.

The Consumer Price Index increased 3.8 per cent last month on an annual basis, while economists polled by Reuters had expected a 3.7 per cent rise.

“We believe the financial markets have been a little slow to appreciate the economic damage that is building with higher prices, oil prices, raw materials, all those things that could accelerate global inflation,” said Doug Beath, global equity strategist, Wells Fargo Investment Institute.

“April had the highest S&P 500 returns since 2020. Obviously, earnings continue to exceed expectations. But I do think even though it (CPI) is a little bit higher than expected, it could be more important because of the fact the negotiations are still in limbo.”

President Donald Trump said a ceasefire with Iran was “on life support” after Teheran rejected a US proposal to end the conflict, keeping oil prices elevated as the key Strait of Hormuz shipping route remained closed.

Although a strong earnings season has helped bolster market sentiment, the lack of progress in negotiations between Washington and Teheran remains a concern for market watchers as surging oil prices fuel worries of higher inflation.

Ahead of the war, traders had expected two rate cuts, per CME Group’s FedWatch Tool, but currently expect the Federal Reserve to keep interest rates steady through the end of the year.

Producer prices and retail sales data are also due this week, with investors turning to macroeconomic cues as the first-quarter earnings season draws to a close.

The Dow Jones Industrial Average rose 35.2 points, or 0.07 per cent, at the open to 49,739.62. The S&P 500 fell 22.2 points, or 0.30 per cent, at the open to 7,390.63​, while the Nasdaq Composite dropped 187.1 points, or 0.71 per cent, to 26,087.009 at the opening bell.

All three major US stock indexes advanced on Monday, with the S&P 500 and the Nasdaq notching fresh record closing highs, supported by continued optimism around artificial intelligence and the health of Corporate America.

That AI-linked momentum cooled on Tuesday, with most chip stocks trading lower before the bell.

Intel shares eased 3.8 per cent after climbing more than 17 per cent in the previous two sessions.

Among other movers, Hims & Hers Health tumbled 15 per cent after the telehealth firm missed Wall Street estimates for first-quarter revenue and posted a surprise loss.

Venture Global rose 8.3 per cent after the LNG exporter raised its annual adjusted core profit forecast. REUTERS