U.S. inflation hits 4.2% as tensions rise over Strait of Hormuz

U.S. consumer prices increased at an annual rate of 4.2% in May, the highest level in three years. President Donald Trump said the figure was a sign that inflation would soon decline once hostilities with Iran end.

The United States and Iran entered a second day of renewed fighting after a U.S. Apache helicopter was downed near the Strait of Hormuz. U.S. Central Command described the strikes as a response to Iran’s "unwarranted and continued aggression," and the president said the United States would hit Iran "hard again today" while urging Tehran to sign a "meaningful" agreement.

Trump also referenced a secret operation he ordered in April that involved military assistance to commercial vessels moving oil through the strait. Data from JPMorgan suggest that roughly 2 million barrels per day may be transiting on tankers with transponders disabled, a figure that aligns with the president’s claim.

U.S. CENTCOM posted on X that commercial ships continue to transit the strait, contradicting Iran’s military command, which announced a closure of the waterway to all vessels.

Oil prices rose sharply, with July U.S. crude futures up 2.94% to $92.68 per barrel and August Brent futures gaining 2.52% to $95.45 per barrel. The higher energy costs contributed to a broader market sell-off, sending the Dow down more than 900 points and prompting declines in chip stocks and futures.

The Federal Reserve’s new chair, Kevin Warsh, faces his first inflation report, and market expectations favor holding short-term rates steady. Meanwhile, investors are watching upcoming listings, including SpaceX’s anticipated initial public offering, which could become the largest in history.