Kamal Ghorui
Wall Street retreated sharply on Friday as a sell-off in artificial intelligence-linked technology stocks and rising concerns over inflation triggered by elevated oil prices pushed major US indices lower from record highs, AP reported.The S&P 500 fell 1.1 per cent after hitting an all-time high a day earlier, while the Dow Jones Industrial Average dropped 408 points, or 0.8 per cent, in early trade. The Nasdaq Composite declined 1.6 per cent as heavyweight technology stocks came under pressure.AI-linked stocks, which had powered much of the market rally this year, led the decline amid concerns that valuations had become overstretched following months of sharp gains.Nvidia, widely seen as the face of the AI-driven rally, dropped 3.6 per cent and emerged as the biggest drag on the S&P 500. The stock had gained more than 26 per cent so far this year before Friday’s correction.“To us, it looks like markets have pushed into overbought territory,” Brian Jacobsen, chief economic strategist at Annex Wealth Management, said.“The path is unlikely to be smooth. Periods like this call for discipline more than hope,” he added.Investor sentiment was also weighed down by rising oil prices and fears that the prolonged Iran conflict could further intensify global inflationary pressures.The Strait of Hormuz — a critical global energy shipping route — remains disrupted amid the ongoing conflict, pushing Brent crude prices up another 2.1 per cent to $107.97 per barrel. Oil prices were trading around $70 before the war escalated earlier this year.The rise in crude prices has increased concerns that inflation could remain elevated for longer, limiting the US Federal Reserve’s room to cut interest rates.The pressure was visible in the bond market, where Treasury yields climbed sharply. The yield on the 10-year US Treasury rose to 4.56 per cent from 4.47 per cent a day earlier, while the 30-year Treasury yield approached its highest level since 2023 after crossing the 5 per cent mark.Higher bond yields tend to increase borrowing costs for households and businesses while also reducing the attractiveness of equities and other risk assets.Markets are increasingly reassessing expectations around US interest rates, with traders scaling back hopes of rate cuts this year and beginning to price in the possibility of rate hikes in 2026, according to CME Group data cited by AP.The sell-off extended across global markets.European and Asian equity markets also declined sharply, with South Korea’s Kospi index tumbling 6.1 per cent after previously touching record highs driven by enthusiasm around AI-related stocks such as SK Hynix.Analysts said Friday’s market move reflected growing caution around the sustainability of the AI-led rally.“If nothing else this should be a ‘shot across the bow’ for how volatility works both ways,” Jonathan Krinsky, chief market technician at BTIG, said.
