US inflation data spikes, delaying Fed cuts as oil shock persists

US equity indexes closed mixed but broadly weak as traders digested a hot inflationThe rate at which prices rise across an economy. print that upended recent dovish Fed sentiment. The S&P 500 and Nasdaq Composite fell on repricing of rate expectations, while the Russell 2000 underperformed. VIXThe 30-day implied volatility of S&P 500 options. The 'fear gauge.' volatility spiked as bond yields climbed, with the 10-year Treasury hitting 5%, its highest level since July 2024. Energy shocks from the Iran conflict remain the dominant driver of price pressures; oil supply disruptions have collapsed Hormuz flows to 1990s lows, tightening global crude inventories at record pace.

Energy and financials led the day's gainers, as higher rates boosted bank net interest margins and oil prices remained elevated. Energy stocks rallied on sustained crude and natural gas strength amid Middle East supply constraints. Conversely, growth and technology stocks retreated as higher real rates compressed valuations; megacap names like NVIDIA and Tesla sold off on the softer demand backdrop and extended rate-hold timeline. Consumer discretionary also lagged as stagflation risks rose.

Single-stock standouts today included Ford, which surged on positive earnings or outlook revisions (per wire reports flagging its biggest one-day leap since 2020), and several rate-sensitive names that buckled under rising Treasury yields. Airlines like Air New Zealand announced full-year losses tied to soaring jet-fuel costs from the Middle East shock, underscoring the energy cost pass-through to the real economy. Crypto assets showed mixed signals; altcoin rotation continued with XRP and Solana ETFs pulling inflows while Bitcoin and Ethereum saw outflows, reflecting tactical rebalancing amid regulatory optimism around XRP's commodity classification.

Cross-asset moves reflected the inflationThe rate at which prices rise across an economy. shock: the US dollar index (DXYThe US Dollar Index — trade-weighted USD against EUR, JPY, GBP, CAD, SEK, CHF.) rose as higher US real rates attracted safe-haven flows; the euro and yen weakened as commodity-linked currencies struggled. Gold climbed on stagflation hedging demand. WTI crude and Brent remained elevated near multi-year highs, with tanker diversions and geopolitical premium intact following Iran war escalation.

After-hours saw earnings trickle in including Manulife Financial, which announced Q1 2026 results and dividend declarations; wire reports also flagged Cerebras Systems pricing its AI chipmaker IPOInitial Public Offering - a company's first public sale of stock. at $185 per share, tapping surging semiconductor demand. Forward guidanceCompany-issued forecasts of future financial performance. across industrials and airlines flagged margin pressure from elevated energy inputs.

Tomorrow's setup hinges on whether inflationThe rate at which prices rise across an economy. expectations stabilize or extend higher. Traders will eye any Fed commentary hinting at policy adjustment, and physical energy markets remain critical as Middle East tensions show no signs of easing. Trump's visit to Beijing with NVIDIA and other tech CEOs sparks speculation on tariff negotiations and AI chip access to China, a wild card that could shift sector rotation if trade tensions ease.