Indexes

Wednesday brought the selling that Tuesday's rotation had postponed. An energy-driven inflation report and a widening exchange of strikes between the United States and Iran knocked every major average down more than 1%, with the S&P 500 fading from an early high near 7,397 to settle at 7,266.99, within a point of its worst level of the day, while the VIX pushed above 22 as investors paid up for protection.

Sector Heat Map

Money that stayed in stocks crowded into groceries, power bills and oil wells.

Four defensive or commodity-linked groups finished green while everything tied to the economic cycle sold off, a clean reversal of the offense that led through late May.

In the News

Drivers

Thursday hands the market a European rate decision before New York opens and a wholesale inflation reading at 8:30 AM ET.

1. The European Central Bank's first hike in two years. Money markets have fully priced a quarter-point increase to 2.25%, so the decision itself should not surprise; the guidance will. Language signaling a series of increases to fight energy-driven inflation would push the euro higher and add to the global upward pull on yields, while a move framed as insurance, done and then on hold, would let bond markets exhale.

2. May producer prices. The PPI report answers the question today's CPI left open: how much cost pressure is still building in the pipeline before it reaches consumers. Caterpillar's selloff already put a face on rising input costs, and a hot wholesale reading would harden the case for a December rate increase just before Kevin Warsh's first meeting next week.

3. Whether Oracle's $40 billion changes the AI trade. Thursday's open prices Oracle's financing plan alongside Super Micro's wreckage, and together they ask whether the AI build-out has outgrown the cash flows funding it. Adobe's report after the close tests software monetization, while Lennar's results show how housing is holding up with the 30-year Treasury above 5%. A bad day for all three would broaden the funding worry well beyond hardware.

SPY daily: two finishes below the 20-day average; the 50-day near $717 is the support the bulls need.

Super Micro daily: the $7 billion raise erased more than a fifth of the company's value in one session.

Caterpillar daily: a 6.3% drop through the 20-day line; the 50-day near $847 is next.

Coca-Cola daily: a 2.8% gain to a 52-week high as money crowded into staples.

Rates, FX, Commodities

Bond investors read the inflation report as two different stories: relief in the core, trouble in the headline.

A 42-basis-point gap now separates the 2-year from the 10-year, with the short end pricing core relief while the long end carried the energy worry. A 25-basis-point Fed increase in December remained fully priced after the data.

Crude reversed Tuesday's decline once the strike exchange made the truce look fragile, with West Texas Intermediate settling just above $90 and adding more than a dollar in late electronic trading. Gold kept falling anyway: the metal has dropped more than 11% in a month as rate expectations and a dollar back above 100 outweigh whatever safety demand the conflict generates.

Technicals

Support levels are now doing the work that momentum did all spring. Two straight finishes have landed beneath the S&P 500's 20-day line in the 7,470 area, and Wednesday's close left the index leaning on its 50-day at roughly 7,213, less than 1% down from here, the test that matters. The Nasdaq 100 told the same story lower, closing at 28,508.03 with its own 20-day overhead near 29,630 and the 50-day around 27,790 as the floor to defend. In the bond market the two ends of the curve point opposite ways: the 2-year at 4.12% sits near the bottom of its one-month span, while the 10-year at 4.54% trades within 13 basis points of its mid-May peak at 4.67%, and a close through that level would put the rate scare back in charge of equities. Broadcom remains the most consequential chart in the market's weakest group, pressing further below the 50-day line it lost during last week's semiconductor break.

Broadcom, hourly: steady distribution all session carried the stock under $375 to a $372.10 close, with no afternoon recovery attempt.

Breakouts & Breakdowns

Breakouts

Coca-Cola (KO) — punched through its early-June shelf near $82 to a 52-week high close at $83.59, up 2.8%, on the day's defensive stampede. Holding above $82 keeps the staples leader in record-setting position.

Chevron (CVX) — reclaimed its 20-day and 50-day lines clustered near $188, closing at $189.80 with crude's advance. Wednesday's intraday high at $192.68 is the next hurdle; above it the spring peak near $209 comes back into view.

Breakdowns

Broadcom (AVGO) — extended its slide to $372.10, down 4.3%, trading roughly 8% beneath the 50-day average near $404 it surrendered last week. The 200-day line at about $356 is the next support with real history behind it.

Caterpillar (CAT) — sliced through its 20-day line near $893 and closed on the session low at $856.16. The 50-day at roughly $847 now decides whether this is a pause in the year's monster run or the start of a top.

Top Movers

Gainers

Coca-Cola (KO) rose 2.8% to $83.59, a 52-week high, as consumer staples became the session's shelter. Investors paid for the steadiest earnings stream available on a day when the inflation report showed input costs accelerating for nearly everyone else, and Coca-Cola's pricing power historically lets it pass energy-driven costs through without losing volume.

Costco (COST) gained 1.5% to $983.37 in the same defensive move. The warehouse club tends to win twice from an inflation scare, once as a haven for investors and again as households trade toward bulk value when gasoline eats more of the budget.

Chevron (CVX) added 1.2% to $189.80 with Brent crude above $94. The integrated majors capture the war premium directly through their production arms, and Chevron is the hedge many portfolio managers reach for first when Middle East risk widens, so further escalation would likely keep the bid alive.

Losers

Super Micro Computer (SMCI) collapsed 22.4% to $29.27 after announcing plans to raise about $7 billion in equity and equity-linked securities to fund component purchases for roughly $39 billion in new AI-server orders. The order number is enormous, near a full year of revenue, but shareholders balked at the dilution and at the implication that Super Micro cannot fund growth from its own thin margins. The reaction is a warning for every AI-hardware name that needs outside capital to fill its backlog, a list that grew by one more after the close when Oracle outlined its own financing plans.

Caterpillar (CAT) fell 6.3% to $856.16, the largest drag on the Dow. The machinery maker is absorbing manufacturing input costs rising at their fastest pace in roughly four years alongside tariff expenses it has guided to $2.2 billion to $2.4 billion for 2026, and Wednesday's energy-heavy inflation data made that squeeze look more durable. Deere fell almost 3% in sympathy, and the pair dragged industrials to the bottom of the sector table.

Delta Air Lines (DAL) lost 5.5% to $76.47 and United Airlines (UAL) fell 5.4% to $102.78 as crude's climb repriced their fuel bills. Jet fuel is the second-largest expense for both carriers, and the CPI's 23.5% annual jump in energy prices quantified the pressure a $90-plus barrel puts on summer margins. The question for the group is whether fare increases can keep pace; the next traffic updates will test management's claim that demand can absorb them.

Chewy (CHWY) slipped 3.5% to $19.98 despite a clean first quarter reported before the open. Net sales of $3.36 billion rose 7.7% and edged past the $3.35 billion consensus, while adjusted earnings of 43 cents a share matched estimates exactly, and that was the problem: a meet-everything quarter gave no one a reason to chase the stock on a day with no patience for neutral news.

Key Macro Data Today

Underneath the 4.2% headline, the report was less alarming than it looked. Energy jumped 3.9% in the month and is up 23.5% over a year, accounting for the bulk of the increase, while shelter rose 0.3%, half of April's pace, core goods prices fell 0.1%, and transportation services declined 0.6%. The soft core gave traders room to trim rate-hike bets at the margin, though a December quarter-point increase stayed fully priced, and the report lands six days before Federal Reserve Chair Kevin Warsh chairs his first policy meeting.

Notable Earnings This Session

Pre-Open

Chewy carried the morning slate with the in-line first quarter covered above; the muted reaction said more about the market's mood than about the pet retailer's execution.

Post-Close

Oracle (ORCL) ended the regular session at $201.26, down 2.4%, then dropped roughly 9% in late trading despite a fiscal fourth quarter that beat on every headline. Revenue rose 21% to $19.2 billion against the $19.1 billion expected, adjusted earnings of $2.11 a share cleared the $1.96 estimate, cloud infrastructure grew 93%, and contracted future revenue swelled by $85 billion in the quarter to $638 billion. What spooked the late crowd was the funding plan: roughly $40 billion in new debt and equity expected in fiscal 2027 to keep building data centers, on top of $48 billion raised this year, putting the same dilution question that crushed Super Micro in front of a company thirty times its size.

What Drove the Tape

Two stories compounded each other on Wednesday, and neither offered stocks an exit. The inflation report confirmed that the Iran war is showing up in American consumer prices, with energy responsible for most of the fastest annual increase in three years, and hours later the conflict escalated again as Iran answered US strikes with missile fire across three Gulf states. That combination repriced the most exposed equities first: airlines lost 5% on fuel, Caterpillar dropped 6% on input costs, and the AI complex sagged under Super Micro's dilutive capital raise. Buyers concentrated in consumer staples, energy producers and utilities, the narrow set of businesses that either profit from a $94 Brent barrel or shrug it off. The S&P 500's close near its session low, with volatility bid into the bell, showed how little appetite remained to carry risk into Thursday's central-bank decision in Europe.