Sinking AI Stocks Knock Wall Street Off Its Records as Markets Drop Worldwide on Inflation Worries

💡 AI stocks plummeting amid inflation concerns, sending Wall Street into a tailspin.

The Federal Reserve delivered a hawkish surprise on Wednesday, signaling that interest rate cuts remain further away than markets had hoped. Fed Chair Jerome Powell told reporters that the central bank needs "greater confidence" that inflation is sustainably declining before it will consider easing policy.

The 10-year Treasury yield surged to 4.8% in the aftermath, its highest level since October 2023. $TLT fell sharply as bond traders repriced the timing of the first cut from March to June.

AI Stocks in Free Fall

$NVDA plummeted 10% as investors fled from the tech sector, driven by concerns over the economic growth prospects and inflation. The stock has now lost 20% in the past two weeks, wiping out its gains from the initial AI hype.

Global Markets in a State of Panic

The S&P 500 index plummeted 2.5% to 3,800, its lowest level since 2023, while the Dow Jones Industrial Average shed 2.2% to 29,500. European markets were also severely impacted, with the FTSE 100 index falling 5% to 7,500.

What's Behind the Selloff?

The sudden selloff can be attributed to the inflation concerns, which have been building up over the past few months. As the economy shows signs of a slowdown, investors are becoming increasingly risk-averse, driving the market downwards.

What It Means for Investors