Wall Street Woes: AI Highs Hit by Inflation and Energy Spike

On Friday, U.S. stocks pulled back from their artificial intelligence-driven record peaks as escalating crude prices spurred global inflation worries.

All three major U.S. stock indexes dropped, influenced by a surge in benchmark Treasury yields, with the energy price hike feeding fears of long-standing inflation. This prompted investors to consider bonds over high-risk equities. "There's a realization that the market got ahead of itself," said Kenny Polcari of Slatestone Wealth. "It disregarded warnings from the bond market and data, driven by AI trade momentum."

Oil prices soared following stark remarks from U.S. President Trump and Iran's Foreign Minister, raising doubts over their fragile peace and hindering normal Strait of Hormuz shipping. The 10-year Treasury yield hit a peak since May 2025, a time marked by Trump's tariff announcement fallout. Bond yields globally rose amidst evidence of Iran conflict's economic ramifications. Trump's summit with China's Xi Jinping yielded limited success, adding to inflation concerns.

(With inputs from agencies.)