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

Some of the sharpest drops hit stocks that had been on electric runs in part because of the artificial-intelligence boom. After coming into the day with a gain of nearly 179% for the year so far, for example, Micron Technology dropped 3.9%. CoreWeave sank 5% to cut into its gain of 60% for the year to date. Broadcom fell 1.6% and was one of the heaviest weights on the market because of its large size.

The pullback for AI stocks began earlier in the day in Asia, where South Korea’s Kospi index tumbled 2.3% from its all-time high on worries that the government may redistribute windfall AI profits to its citizens.

Also weighing on Wall Street was another rise in oil prices as the war with Iran threatens to drag on. The price for a barrel of Brent crude climbed 3.4% to $107.72 as a fragile U.S.-Iran ceasefire looks more tenuous. The war has essentially shut the Strait of Hormuz to oil tankers, keeping them stuck in the Persian Gulf instead of delivering crude to customers worldwide.

The resulting leap for crude oil prices, with Brent up from roughly $70 per barrel before the war, caused inflation in the United States to worsen last month by more than economists expected, according to a report released Tuesday morning. In another discouraging signal, price increases accelerated by more in April than economists expected even after excluding gasoline and food costs.

That could be a result of tariffs and bad weather also pushing prices higher, according to Brian Jacobsen, chief economic strategist at Annex Wealth Management.

Treasury yields rose in the bond market following an initial zigzag, suggesting traders suspect the Federal Reserve will keep interest rates high in response to the worse-than-expected inflation data.

The Fed has been keeping its cuts to interest rates on hold recently, as it waits to see how high inflation will go because of the war with Iran and the tariffs introduced by President Donald Trump. That’s because lower rates can worsen inflation at the same time that they give the economy a boost.

The yield on the 10-year Treasury rose to 4.45% from 4.42% late Monday. It’s well above its 3.97% level from before the war.

Despite the climbs for Treasury yields, oil prices and uncertainty because of the Iran war, the U.S. stock market has remained remarkably resilient recently, in large part because companies keep producing bigger profits than analysts expected

Zebra Technologies became the latest company in the S&P 500 to top analysts’ expectations for earnings, and its stock leaped 17.3%. The company, which helps customers digitize and automate their workflows with bar code scanners and other products, also gave a forecast for profit over the full year that topped analysts’ expectations.

In stock markets abroad, indexes mostly fell across Europe and Asia.

Besides South Korea’s tumble, losses of 1.1% for Germany’s DAX and 07% for France’s CAC 40 were some of the world’s sharpest.

Japan’s Nikkei 225 added 0.5%.

AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.