US stocks fell heavily on Wednesday after fresh inflation data reinforced expectations of higher interest rates while renewed military clashes between the United States and Iran pushed oil prices higher and unsettled markets.
The Dow Jones Industrial Average dropped about 950 points, or 1.9%, while the Nasdaq Composite lost roughly 2% as the recent retreat from large technology stocks gathered pace. The S&P 500 fell 1.6%.
Investors were focused on the latest US consumer price index report, which showed inflation rising 4.2% annually in May, matching forecasts but marking the fastest pace since May 2023. The reading strengthened expectations that the Federal Reserve may keep rates higher for longer, with some traders now increasing bets on another rate rise later this year.
Energy costs remained the main driver of inflation as tensions in the Middle East intensified. Overnight, the US and Iran exchanged strikes following the downing of an Apache helicopter, while President Donald Trump said Iran had “taken too long” to negotiate and warned it would “pay the price”.
The technology sector remained under pressure as investors continued rotating out of AI-linked stocks ahead of a packed week for the industry.
Attention turned to Oracle, which reported quarterly results after the market closed, while investors also prepared for the expected IPO of SpaceX on Friday.
SpaceX’s planned listing has drawn extraordinary demand, with orders reportedly exceeding available shares by more than four times before banks were due to stop taking institutional orders on Wednesday afternoon in New York.
The company is offering 555.6 million shares at $135 each, aiming to raise about $75 billion and achieve a valuation close to $1.8 trillion, which would make it the largest IPO ever, eclipsing Saudi Aramco’s 2019 debut.
The deal comes as AI companies race towards public markets. OpenAI confidentially filed for an IPO earlier this week, following a similar move by Anthropic last week.
Together, the three flotations could add an estimated $3.6 trillion in market value to US exchanges, according to Bloomberg calculations.
After the bell, Oracle reported fourth-quarter earnings that beat Wall Street expectations on profit and overall revenue, though cloud revenue came in slightly below forecasts. Earnings per share rose to $2.11 on revenue of $19.18 billion, ahead of analyst estimates for $1.97 and $19.09 billion respectively.
Oracle’s cloud business generated $9.91 billion in revenue, just under expectations of $9.99 billion. Cloud applications revenue missed forecasts, while cloud infrastructure revenue came in slightly ahead of estimates.
The company also announced plans to raise about $40 billion through debt and equity sales to fund an expansion of its data centre capacity, underscoring the huge spending commitments tied to the AI boom. Oracle reaffirmed its target of reaching $90 billion in annual revenue by 2027, and remaining performance obligations, a key measure of future contracted business, rose to $638 billion, comfortably above expectations.
Oracle’s ties to OpenAI remain central to the investment story after the AI company signed a reported five-year, $300 billion agreement with Oracle in 2025 to support its computing infrastructure needs.
