AI sector rout spreads globally
A selloff in artificial intelligence stocks dragged down markets around the world on Friday as investors reassessed valuations in a sector that has driven much of this year's market gains. The slump came as the Iran conflict pushed oil prices higher, raising inflation fears across major economies.
Inflation easing but still above target
The Consumer Price Index fell to a 3.5% annual rate in June, down from 3.8% in May and marking the largest month-over-month decline since 2020. However, core inflation remains above the Federal Reserve's 2% target, and Fed Chairman Warsh, in his first congressional testimony, did not clarify whether he supports further rate hikes. Energy costs remain a wildcard as the Middle East crisis deepens.
Supply chain fears return
The Strait of Hormuz disruption is reigniting supply chain concerns that had largely faded since the pandemic. Analysts warn that $5 diesel prices could push up costs for everything shipped by truck — which is nearly everything consumers buy. The World Cup has given bars and restaurants a temporary boost, but the consumer outlook is darkening.