Plummeting Oil Prices and Housing Indicator Shock: How Far Will the Tech Rally Crack?

U.S. equities closed mixed on the 24th (local time). The S&P 500 slipped 0.1% to 7,358.22 and the Nasdaq declined 0.4% to 25,476.64, while the Dow rose 0.4% to 51,848.90. Despite weakness among the largest technology names, nearly two-thirds of all stocks advanced, underscoring a marked divergence between headline indices and underlying market breadth.

The biggest market driver was housing data. New home sales in May fell to an annualized rate of 580,000 units, down 7.3% month-on-month and well below the 638,000 forecast, hitting their lowest level since last year. Renewed focus on high borrowing costs and elevated home prices reignited concerns about an economic slowdown, even as it also dampened expectations for further Fed tightening.

Uncertainty around the Federal Reserve continues to weigh on markets. The May PCE inflation report—due as early as Thursday—is expected to show headline inflation at around 4% and core inflation in the mid-3% range, pricing in the possibility of prolonged high rates and additional hikes. Nevertheless, the Fed’s annual stress tests revealed that major banks would maintain adequate capital even under severe recession scenarios, somewhat easing worries about financial system risks.

On the global front, easing tensions related to a potential Iran war sent oil prices tumbling. Brent crude fell over 3%, approaching pre-crisis levels, with some benchmarks sliding toward $75 per barrel. As tanker traffic through the Strait of Hormuz began to normalize, supply worries abated and inflation pressures cooled. Energy stocks declined on earnings concerns, while gold prices dipped toward $4,000 as investors anticipated further Fed tightening.

In summary, as of early Korean trading hours on the 25th, Wall Street is grappling with mixed signals from weak housing data suggesting a slowdown, disinflation hopes spurred by the plunge in oil prices, and Fed signals of “higher rates for longer.” In the short term, PCE inflation figures and upcoming semiconductor and big-tech earnings reports will be key to determining whether the recent tech sell-off is a temporary pause or the start of a broader trend reversal.