Inflation Fears and Global Tensions Trigger Wall Street Slump

Wall Street indexes dropped as inflation concerns spurred by Middle East conflict caused a rise in Treasury yields, impacting the ongoing AI-driven rally. The benchmark 10-year Treasury yield reached its highest since 2025, heightening expectations for Fed rate hikes. Energy sector fluctuations added to market volatility, affecting tech stocks significantly.

Wall Street experienced a significant downturn on Friday, as inflationary concerns linked to the Middle East conflict led to a rise in Treasury yields. This development threatened the ongoing AI-driven market rally. The 10-year Treasury note's yield surged to 4.58%, marking its highest level since May 2025.

Economic uncertainties stemming from the Iran war have prompted investors to anticipate quicker interest rate hikes. The likelihood of the Federal Reserve increasing rates by 25 basis points in December has doubled to 40% in the past week, influenced by unexpected inflation data.

Energy market dynamics added to Wall Street's woes, with Brent crude prices rising 2.4%. Technology stocks faced the brunt of the decline, with major semiconductor stocks plummeting. Airline stocks were also hit due to escalating oil prices. Market volatility persisted as the U.S.-China summit concluded without notable progress.