ASX set to slide as tech slump, rising oil prices hurt Wall Street; eBay rejects GameStop
Stan Choe
Rising oil prices and a sudden halt in technology stocks caused Wall Street to tumble from record highs on Tuesday.
The S&P 500 fell 0.4 percent from its all-time high the previous day. The Dow Jones index gained 73 points, or 0.2 percent, and the Nasdaq composite fell 1.2 percent, its own record.
The Australian share market is poised for a decline, with futures pointing to a 15 point, or 0.2 per cent, decline at the open. The ASX lost 0.4 per cent on Tuesday. Local investors will also be digesting the results of the federal budget announced Tuesday night.
Some of the sharpest declines have hit electric chip companies and stocks due to the AI boom. Intel is down 8.6 percent after its shares have more than tripled so far this year. Micron Technology is down 6.1 percent after entering the day with a nearly 180 percent year-to-date gain, and CoreWeave is down 7.7 percent to pare its 60 percent gain in 2026.
The pullback in AI stocks began earlier in the day in Asia; South Korea’s Kospi index fell 2.3 percent from its all-time high on concerns that the government could redistribute windfall AI profits from companies to its citizens.
Another rise in oil prices has also put Wall Street under pressure as the war with Iran threatens to continue. The barrel price of Brent crude oil rose by 3.6 percent to $107.97 as the fragile ceasefire between the US and Iran appeared weaker. The war closed the Strait of Hormuz to oil tankers, leaving them stuck in the Persian Gulf instead of delivering crude oil to customers around the world.
The jump in crude oil prices, driven by Brent rising from nearly $70 a barrel before the war, caused inflation in the United States to worsen more last month than economists expected, according to a report published Tuesday. In another discouraging signal, price gains accelerated more in April than economists expected, even after excluding gasoline and food costs.
This could be a result of tariffs and bad weather also pushing up prices, according to Brian Jacobsen, chief economic strategist at Annex Wealth Management.
Treasury yields rose after an initial zig-zag in the bond market; This suggests investors suspect the Fed will keep interest rates high to fight inflation.
The Fed has recently been suspending interest rate cuts to see how high inflation will rise due to the war with Iran and the tariffs imposed by President Donald Trump. This is because while low rates stimulate the economy, they can also worsen inflation.
The yield on the 10-year Treasury note rose to 4.46 percent from 4.42 percent late Monday and remains well above its pre-war level of 3.97 percent.
Traders still largely expect the Fed to keep its key interest rate steady this year, but they now believe the odds of a rate hike by December are better than 1 in 3, according to data from CME Group. While higher rates push down stock prices, they also slow down the economy.
Despite rises in Treasury yields, oil prices and uncertainty due to the Iran war, the US stock market has remained remarkably resilient of late; A big reason for this is that companies continue to make more profits than analysts expected.
Zebra Technologies was the last company in the S&P 500 to top analysts’ earnings expectations, with its shares rising 14.4 percent. The company, which helps customers digitize and automate workflows with barcode scanners and other products, also gave a profit forecast that beat analysts’ expectations.
But Under Armor lost 19.4 percent of its value in the latest quarter after reporting a worse loss than analysts expected. CEO Kevin Plank said the company continues to take steps to “reset the business and re-establish the discipline needed to operate as a best-in-class brand.”
Outside of earnings reports, GameStop fell 2.5 percent after eBay rejected a buyout offer from a much smaller company, calling it “neither credible nor attractive.” It highlighted uncertainty over how GameStop would raise money to make the acquisitions, among other difficulties in the deal, and eBay’s shares rose 1.4 percent.
Beazer Homes USA fell 4.8 percent after it rejected an equally unsolicited buyout offer. He said Dream Finders Homes had repeatedly undervalued itself in its attempts to buy the builder, including a recent bid that was lower than previous bids.
Dream Finders fell 13.7 percent.
In foreign stock markets, indices fell mostly in Europe and Asia.
Along with the decline in South Korea, losses of 1.6 percent in the German DAX and 1 percent in the French CAC 40 were some of the sharpest losses in the world.
Japan’s Nikkei 225 index gained 0.5 percent.
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