New York, May 28, 2026, 11:02 EDT
Dow slides as U.S.-Iran worries and inflation data cool record run The Dow Jones Industrial Average slipped Thursday, losing ground after a string of records. U.S.-Iran tensions and new inflation data drove investors to cut some risk. By 10:01 a.m. ET, the Dow was down 110.97 points, or 0.22%, at 50,533.31. The S&P 500 barely moved and the Nasdaq Composite dipped 0.02%. “The number was not as bad as feared,” said Angelo Kourkafas, senior global investment strategist at Edward Jones. Reuters
Stocks took a breather, a day after the S&P 500, Dow, and Nasdaq all closed at all-time highs. Investors on Wednesday had pushed indexes higher, betting on the chance that U.S.-Iran peace talks might reopen the Strait of Hormuz and take some heat off oil prices.
Fresh inflation data tamped down optimism. The personal consumption expenditures price index—the PCE, used by the Fed to track consumer prices—was up 3.8% in April from a year ago. The core PCE, which removes food and energy, rose 3.3%.
Energy stocks led declines. According to Reuters, April PCE inflation hit its fastest pace in three years, with energy costs climbing on fallout from the Iran war. Gasoline prices jumped 12.3% in April and are up more than 50% since the conflict started in late February.
Rates stayed in focus. New York Fed President John Williams said policy is “right where we want it to be.” He said inflation may stay high in the near term, then ease later this year. Higher rates usually put pressure on stocks by raising borrowing costs and making bonds more attractive than equities. Reuters
Some Fed policymakers rejected hopes that artificial intelligence could deliver fast relief on inflation. St. Louis Fed President Alberto Musalem called for keeping monetary policy “vigilant,” and Chicago Fed President Austan Goolsbee said rates might have to go higher if AI hype stokes extra demand. Reuters
Dow drops as industrials lead losses. Caterpillar and Sherwin-Williams pulled the index lower, with MarketWatch saying those two names made up a big part of the Dow’s drop this morning. Because the Dow is price-weighted, higher-priced stocks like these can weigh more on the index than cheaper shares, no matter their market cap.
AI names stayed firm even as the rest of the tape turned lower. A Reuters poll found strategists sticking to a positive year-end call, with the median view for the Dow at 52,500 by the end of 2026. But the poll also signaled war risks are starting to weigh on rate expectations as inflation fears creep in.
Oil moved markets again. Crude prices were higher as traders looked at fresh worries about Iran, the Strait of Hormuz, and whether hopes for peace will last, Barron’s said. That’s a big risk for stocks: more gains in oil could keep inflation high and give the Fed less room to cut.
But it’s not just oil prices to watch. If diplomacy fails, Treasury yields climb, or earnings fall short outside AI, the Dow could take a bigger hit than the Nasdaq. Industrial and consumer stocks have already been trailing.
Right now, momentum in the market is still running near records, but traders say the margin for error is shrinking. The Dow’s key test is if buyers show up around 50,500, or if the inflation and oil trade makes today’s drop stick around longer.
