Wall Street falls from its records as AI stocks slump and oil prices rise

Wall Street retreated from record highs on Tuesday, with the S&P 500 down 1% and the Nasdaq composite falling 2% after AI-linked stocks led declines. Intel dropped 10.5%, Micron fell 9.8%, and CoreWeave sank 10.8%, reversing earlier gains fueled by artificial intelligence demand. The pullback began in Asia, where South Korea’s Kospi index fell 2.3% amid fears of government redistribution of AI profits. Oil prices climbed 3.3% to $107.66 per barrel as the U.S.-Iran conflict intensified, disrupting shipping through the Strait of Hormuz. Brent crude had risen from around $70 before the war, contributing to higher-than-expected U.S. inflation in April, even excluding food and energy costs. The Federal Reserve’s bond yields rose, with the 10-year Treasury yield hitting 4.45%, signaling expectations of prolonged high rates to combat inflation. Traders now assign a greater-than-30% chance the Fed will raise rates by December, though most still expect no change this year. Despite market volatility, corporate earnings resilience kept stocks afloat—Zebra Technologies surged 16.8% after beating profit forecasts, while Under Armour plunged 19.1% following a worse-than-expected quarterly loss. GameStop fell 1.5% after eBay rejected its buyout offer, citing financial and operational uncertainties. The Dow Jones Industrial Average also declined by 77 points (0.2%) by midday, reflecting broader market caution amid geopolitical risks and inflation pressures.