US Stock Market Sees Decline as Crude Oil Prices Remain Elevated and Inflation Accelerates in April

US Stock Futures Indicate Negative Start to Trade Amid Escalating Middle East Tensions

US stock futures are pointing to a negative start to trade on Tuesday, 12 May, as the ceasefire situation in the Middle East appears increasingly fragile, keeping crude oil prices elevated. At the same time, the record-breaking rally in chip stocks is cooling down.

The Nasdaq 100 futures have fallen 0.8% after a strong rally in chipmakers had pushed the index to back-to-back record highs. Meanwhile, S&P 500 futures have slipped 0.4%, while Dow Jones Industrial Average futures have declined 0.03%. This comes as US equities are coming off a strong run, with the S&P 500 and Nasdaq having just posted their sixth consecutive weekly gain, with both indices ending Friday at fresh record highs as better-than-expected corporate earnings signalled that the US economy was continuing to hold up well.

Tensions in the Middle East are expected to escalate again after US President Donald Trump said the month-old ceasefire with Iran was "on life support," following Tehran's response to a US proposal aimed at ending the conflict, which highlighted that both sides remain far apart on key issues. Trump over the weekend rejected Iran's response to the US peace proposal, raising concerns that the conflict could drag on and continue disrupting shipping through the Strait of Hormuz. Iran on Sunday reportedly released a proposal to end the war on all fronts, which included demands for compensation for war damage and emphasized Iranian sovereignty over the Strait of Hormuz.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Comparison of US Stock Futures

Technology stocks are now taking a breather amid growing concerns that the recent AI-driven rally may have run too far, too fast. The ongoing impasse between the US and Iran is also weighing on sentiment, with the Strait of Hormuz remaining effectively shut after more than two months of war and failed diplomatic efforts.

Meanwhile, the annual inflation rate in the US has accelerated to 3.8% in April 2026, the highest level since May 2023, compared to 3.3% in March, as the oil shock triggered by the Iran conflict continues to fuel price pressures. The war has pushed Brent crude prices nearly 50% higher from pre-war levels of around $70 per barrel, adding to inflationary pressures across the global economy.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Crude oil prices extend rally, with Brent crude futures surging nearly $4 to cross the $108 per barrel mark after rallying 3% in the previous session. Meanwhile, WTI crude futures climbed above $101 per barrel, touching an intraday high of $102.05. The rebound in oil prices has revived concerns that escalating tensions in the Middle East could once again spill over into inflation, supply chains, and broader market volatility.

Semiconductor stocks weaken amid inflation, with Vested Finance noting that the AI-driven rally is beginning to show signs of fatigue, particularly in semiconductor stocks that had led the market rally this year. It added that chipmakers across Asia, Europe, and the US in futures trading witnessed renewed pressure, while South Korean technology giants such as Samsung Electronics and SK Hynix declined sharply amid concerns over potential new taxes on AI-related profits.