Oil Above $101 and Hot April CPI Report Weigh on US Stocks

Bond selling accelerates after April CPI report

South Korean market weakness pressures semiconductor shares

US stocks fell on May 12 as investors sold both equities and bonds after oil prices climbed and the April consumer price report reignited inflation concerns.

Inflation fears resurfaced after US crude rose above $101 a barrel. West Texas Intermediate crude for June delivery traded 3.7% higher at $101.8 a barrel. Brent crude for July delivery, the international benchmark, stood at $107.82.

The two-year Treasury yield rose 4 basis points to 3.994%, nearing its highest level since June 2025.

The S&P 500, which hit a record high a day earlier, was down 0.7% as of 10:40 a.m. in New York. Nasdaq technology shares fell as Asian semiconductor stocks, including those in South Korea, weakened after serving as a barometer for the AI trade. The Nasdaq Composite dropped 1.1%, while the Dow Jones Industrial Average fell 0.6%.

Semiconductor stocks that had led the recent rally also turned lower. Nvidia slipped 0.3%, while Micron Technology fell nearly 6%. The move came as higher oil prices and the CPI report highlighted the impact of rising energy costs and supply disruptions stemming from the war in Iran.

US inflation accelerated last month as gasoline and food prices climbed, outpacing wage growth and adding pressure on consumers already under strain. The consumer price index rose 3.8% from a year earlier, the highest since 2023. Core CPI, which excludes food and energy, increased 2.8%.

Austan Goolsbee, president of the Federal Reserve Bank of Chicago, told NPR the inflation data showed price pressures were widespread across the US economy and could be a sign of overheating. “Our country is facing an inflation problem, and we have to bring it down,” he said.

Ellen Zentner of Morgan Stanley Investment Management said the rise in core CPI suggested higher energy prices were affecting the broader economy. That does not mean the Fed is about to pivot back to rate hikes. But it does reinforce the view that even under new Fed leadership, an immediate shift to easier monetary policy is unlikely.

Chris Zaccarelli of Northlight Asset Management said the odds of a Fed rate cut in the near term were very low. While the market does not need rate cuts to keep rising, corporate earnings are now key to sustaining the rally, he added.

The market had already priced in the possibility of rate cuts in 2026 before the report was released, Tim Urbanowicz of Goldman Sachs Asset Management's Innovator ETF said. As long as the 10-year Treasury yield remains below 4.5%, it is unlikely to inflict significant damage on equities, he added.

Kim Jeong-a, contributing reporter, Hankyung.com, kja@hankyung.com