Wall Street stocks fell sharply on Friday, erasing most of the gains from a record high reached the day before. The Nasdaq index led the decline with a 1.3% decline, while the Dow Jones fell below the psychological level of 50,000 points as investors began to worry about volatile inflationary pressures.
The fall came shortly after President Donald Trump wrapped up a two-day summit with President Xi Jinping in Beijing. While the meeting yielded positive results for giants such as Boeing and Nvidia, the lack of a concrete commitment from China to help end the war in Iran disappointed markets hoping for lower energy prices.
Brent crude oil prices rebounded to $108 a barrel as investors judged that supply risks in the Middle East remained high. The failure to reach a diplomatic outcome on Iran means global inflationary pressures are expected to persist, weighing on the economic outlook for the rest of 2026.
Global bond markets were also volatile, with the 10-year US Treasury yield surging above 4.5%. The surge in bond yields reflected investor expectations that the Federal Reserve (Fed) may have to keep interest rates high for longer to combat inflation driven by energy costs and supply chain disruptions.
Despite the broader negative market sentiment, the artificial intelligence (AI) sector is still showing some resilience. Figma (FIG) shares surged after a strong earnings report, demonstrating that demand for AI technology remains robust despite an increasingly challenging domestic macroeconomic and international geopolitical environment.
