The inflation hitting a three-year high dragged down the US stock market, with the Dow falling and chip stocks continuing to face pressure

Odaily Odaily News: U.S. stocks weakened on Wednesday as investors digested a sell-off in the chip sector, escalating geopolitical tensions, and higher-than-expected inflation data. The Dow Jones Industrial Average fell 374 points (0.7%), while the S&P 500 and the Nasdaq Composite both declined by 0.3%.

Market sentiment was clearly impacted by geopolitical shocks. Trump stated that negotiations with Iran were "taking too long" and threatened further action. In response, oil prices rose, with WTI crude climbing over 1% to around $89 per barrel. Tensions also flared again in the Middle East after the U.S. military struck Iranian targets in retaliation for the downing of a U.S. helicopter.

The chip sector continued its correction, with AMD and Broadcom experiencing their fourth decline in five consecutive trading sessions. The sector had already seen an ETF-level retreat of roughly 10% over the past weekend, followed by a brief rebound before coming under renewed pressure. Market participants believe that, on one hand, profit-taking is occurring, and on the other hand, some investors may be adjusting their portfolios ahead of the upcoming **SpaceX IPO (next Friday)** . Despite this, the chip ETF is still up more than 87% year-to-date.

On the macro data front, the U.S. core CPI rose 0.2% month-over-month in May, slightly below the expected 0.3%; the year-over-year rate was 2.9%, in line with expectations but still above the Fed's 2% target. The headline CPI rose above 4% year-over-year for the first time in three years. Markets recovered somewhat from their lows following the data release.

In the previous trading session, chip stocks dragged down the S&P 500 and the Nasdaq, while the Dow closed higher against the trend. Analysts point out that the recent surge in the semiconductor sector, driven by the AI frenzy, has been too rapid, stretching market sentiment significantly. The current pullback is more of a technical correction than a deterioration in fundamentals. (CNBC)