AI Stocks Suffer Losses as Oil Prices Fuel Inflation Fears

The US stock market pulled back from its all-time high on Tuesday as AI stocks declined. The S&P 500 fell by 0.5%, while the Dow Jones Industrial Average dropped by 33 points or 0.1%. This marks the third straight modest loss for the S&P 500 since setting its record high on Thursday.

The decline was led by AI-related stocks, which have been volatile this summer due to concerns that their prices shot too high and demand for memory and processors may fizzle out if AI proves less profitable than promised. Micron Technology dropped 5.9%, while chip companies Nvidia and Broadcom fell by 2.5% and 3.7%, respectively.

The bond market has also been a factor, with yields remaining high due to concerns about inflation and interest rates. The yield on the 10-year US Treasury edged down to 4.71% from 4.72% late Monday but remains above its pre-war level of 3.97%. High oil prices have contributed to this trend, with Brent crude priced at $91.00.