Stock market today: Dow sinks 950 points, S&P 500, Nasdaq plummet as inflation heats up, US-Iran tensions reignite

US stocks moved sharply lower on Wednesday after consumer inflation soared to its highest level in three years and renewed US-Iran military clashes cast doubt on the odds for peace talks.

The Nasdaq Composite ( ^IXIC ) fell around 2%, and the Dow Jones Industrial Average ( ^DJI ) slid by 1.9%, or around 950 points, as the market's recent tech-led sell-off deepened. The S&P 500 ( ^GSPC ) dropped 1.6%.

The focus on Wednesday was on May's CPI report , which showed consumer prices rose at the fastest rate since May 2023. The 4.2% annual rise in CPI inflation was in line with expectations; however, the hot reading may boost bets that the Federal Reserve will hike interest rates this year.

Energy prices remained the biggest driver of inflation, amid the protracted war with Iran. Tensions between the US and Iran ramped back up, with the two sides trading strikes overnight after the downing of an Apache helicopter.

President Trump said on Wednesday that Iran has "taken too long" to negotiate and would have to "pay the price." Later, he told reporters that the US would "hit" Iran "very hard" today. Oil prices jumped.

The tech sector took another bruising as the rotation out of the AI trade continued amid concerns around OpenAI ( OPAI.PVT ) and Anthropic's ( ANTH.PVT ) mega-IPOs . Eyes are now on Oracle ( ORCL ) results due after market close, as the company counts OpenAI as a customer. Details of its cloud business are in focus, amid fluctuations in the AI trade.

The main event of the week lands on Friday, with the expected IPO of Elon Musk's SpaceX ( SPCX ). Its debut is expected to mark the largest public offering in history.