AI chip stocks plunge as Wall Street rally stalls on oil and rate fears

Wall Street’s record-setting streak came to an abrupt halt Tuesday as AI-related stocks sold off sharply, dragging down the broader market. The S&P 500 slipped 0.2% from its all-time high, while the Nasdaq composite dropped 0.7%. Semiconductor companies that had ridden the artificial-intelligence boom to triple-digit gains were hit hardest: Intel fell 6.8% after tripling so far this year, Micron Technology lost 3.6% despite a nearly 180% year-to-date surge, and CoreWeave tumbled 6.1% after a 60% run in 2026. The pullback began earlier in Asia, where South Korea’s Kospi index sank 2.3% from its own record on worries that the government might redistribute AI profits to citizens.

Compounding the tech rout was a fresh jump in oil prices as the war with Iran dragged on. Brent crude rose 3.4% to settle at $107.77 per barrel, up from roughly $70 before the conflict. The de facto closure of the Strait of Hormuz has kept tankers stuck in the Persian Gulf, disrupting global crude deliveries. Higher oil prices worsened U.S. inflation in April more than expected, even excluding gasoline and food, potentially due to tariffs and bad weather. Treasury yields climbed, with the 10-year note reaching 4.45%, as traders now see a better-than-1-in-3 chance the Federal Reserve will hike rates by December. Despite these headwinds, earnings surprises from companies like Zebra Technologies (+11.4%) kept the Dow slightly positive (+0.1%). However, the AI sector’s sudden vulnerability signals that even high-growth themes are not immune to macro shocks.