Slumping AI stocks and rising oil prices halt Wall Street’s record-breaking run

Wall Street’s record-breaking rally hit a snag on Tuesday, with tech stocks tied to artificial intelligence and surging oil prices driving major indices lower. The S&P 500 dropped 0.4% from its all-time high, the Dow Jones Industrial Average fell 185 points (0.4%), and the Nasdaq composite declined 0.6%. AI-related stocks led the downturn, with Micron Technology down 3.9% after a 179% year-to-date gain, while CoreWeave fell 5% and Broadcom dropped 1.6%. The pullback began in Asia, where South Korea’s Kospi index tumbled 2.3% amid concerns over government redistribution of AI profits. Rising oil prices further weighed on markets, with Brent crude climbing 3.4% to $107.72 as tensions in the Iran war persisted, keeping the Strait of Hormuz closed to tankers. The surge in oil prices contributed to worse-than-expected U.S. inflation in April, accelerating even after excluding gasoline and food costs. Economists cited tariffs and bad weather as additional factors pushing prices higher, while Treasury yields rose to 4.45% on expectations the Federal Reserve will maintain high interest rates. The Federal Reserve has delayed rate cuts, wary of inflation risks from the Iran conflict and Trump-era tariffs, which could both boost prices while lower rates stimulate the economy. Despite the market downturn, U.S. stocks have shown resilience due to companies exceeding earnings expectations, such as Zebra Technologies, whose stock jumped 17.3% after beating analyst forecasts and revising its full-year profit outlook upward. Global markets followed a mixed trend, with European indexes mostly falling—Germany’s DAX down 1.1% and France’s CAC 40 off 0.7%—while Japan’s Nikkei 225 rose 0.5%. The downturn reflects broader concerns over inflation, geopolitical risks, and the shifting fortunes of AI-driven tech stocks, which had fueled much of the market’s recent gains.