A sudden stop in tech stocks slowed down Wall Street record run Tuesday.
The S&P 500 fell 0.2% from its all-time high reached the previous day. The Dow Jones Industrial Average added 56 points, or 0.1%, while the Nasdaq composite sank 0.7% from its own record.
Some of the steepest declines hit chip companies and stocks that had been rising due to the artificial-intelligence boom. Intel fell 6.8% after its shares tripled so far this year. Micron Technology fell 3.6% after starting the day with a nearly 180% year-to-date gain, and CoreWeave sank 6.1% to trim its 60% gain by 2026.
The pullback in AI stocks began earlier in the day in Asia, where South Korea’s Kospi index sank 2.3% from its all-time high on concerns that the government could redistribute AI windfalls from companies to its citizens.
AP AUDIO: Wall Street’s Record Streak Halts as AI Stocks Plunge and Oil Prices Rise
After a record run, stocks fell. AP’s Damien Troise reports.
Another rise in oil prices also weighed on Wall Street as war with iran threatens to prolong. The price of a barrel of Brent crude rose 3.4% to settle at $107.77, while the fragile ceasefire between the United States and Iran appears more tenuous. The war has essentially closed the Strait of Hormuz to tankers, keeping them stuck in the Persian Gulf instead of delivering crude to customers around the world.
The resulting jump in crude oil prices, with Brent above about $70 a barrel before the war, caused Inflation in the United States will worsen last month by more than economists expected, according to a report released Tuesday. In another discouraging sign, price increases accelerated more in April than economists expected, even after excluding gasoline and food costs.
That could be a result of tariffs and bad weather also driving up prices, according to Brian Jacobsen, chief economic strategist at Annex Wealth Management.
Treasury yields rose in the bond market after an initial zigzag, suggesting traders suspect the Federal Reserve will keep interest rates high to combat inflation.
The Federal Reserve has kept its interest rate cuts on hold recently as it waits to see how high inflation will be due to the war with Iran and tariffs introduced by President Donald Trump. This is because lower rates can worsen inflation while giving the economy a boost.
The yield on the 10-year Treasury bond rose to 4.45% from 4.42% on Monday and remains well above its pre-war level of 3.97%.
Traders still largely expect the Federal Reserve to hold its main interest rate steady this year, but are now betting on a more than 1-in-3 chance that it could raise rates by December, according to data from CME Group. Higher rates tend to put downward pressure on stock prices, while slowing the economy.
Despite increases in Treasury yields, oil prices and uncertainty due to the Iran war, the U.S. stock market has remained remarkably resilient recently, largely because companies continue to produce higher profits than analysts expected.
Zebra Technologies became the latest S&P 500 company to beat analysts’ earnings expectations, with its shares rising 11.4%. The company, which helps customers digitize and automate their workflows with barcode readers and other products, also gave a full-year profit forecast that beat analysts’ expectations.
But Under Armor sank 17% after reporting a worse loss for the latest quarter than analysts expected. CEO Kevin Plank said the company continues to take steps to “restart the business and restore the discipline necessary to operate as a best-in-class brand.”
Outside of earnings reports, GameStop fell 3.5% after eBay rejected a purchase offer from a much smaller company, calling it “neither credible nor attractive.” It highlighted uncertainty over how GameStop would raise the money to pay for the purchase, among other challenges to the deal, and eBay shares rose 2.1%.
Beazer Homes USA fell 7.3% after also rejecting an unsolicited purchase offer. He said Dream Finders Homes has repeatedly undervalued him in its attempts to buy the homebuilder, even with its latest offer, which offered less than previous bids.
Dream Finders fell 13.4%.
In total, the S&P 500 fell 11.88 points to 7,400.96. The Dow Jones Industrial Average added 56.09 to 49,760.56, and the Nasdaq composite sank 185.92 to 26,088.20.
In foreign stock markets, indices fell mainly in Europe and Asia.
In addition to South Korea’s decline, losses of 1.6% on Germany’s DAX and 0.9% on France’s CAC 40 were some of the steepest in the world.
Japan’s Nikkei 225 rose 0.5%.
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AP Business writers Yuri Kageyama and Matt Ott contributed to this report.
