Stock Market Retreats as Tech Slides on Inflation and Rate-Hike Fears
U.S. stock markets fell sharply on Friday as investors grew concerned about persistent inflation from the Iran conflict and the possibility of future interest rate hikes. The S&P 500, Nasdaq, and Dow all declined as traders reassessed valuations amid uncertainty over the Fed's path under new Chair Kevin Warsh.
Market Pullback on Inflation Concerns
Stocks fell on Friday, bogged down by losses in technology stocks and a rise in U.S. Treasury yields, after a summit between President Donald Trump and Chinese President Xi Jinping ended and left traders worried about no major policy breakthroughs, with the S&P 500 shedding 1.24% to end at 7,408.50, the Nasdaq Composite slipping 1.54% to 26,225.14, and the Dow Jones Industrial Average down 537.29 points, or 1.07%, closing at 49,526.17.
Tech Leadership Reverses
Investors took profits in tech after the group saw sharp gains recently, with Intel retreating more than 6%, while Advanced Micro Devices and Micron Technology lost 5.7% and 6.6%, respectively. Shares of Cerebras Systems fell more than 2% in the premarket on Friday, a day after the stock jumped 68% in its Nasdaq debut, with the chipmaker's market capitalization standing at about $95 billion.
Factory Activity Shows Strength Despite Rate Concerns
Factory activity in the New York region jumped to hits highest level in more than four years during May, with the Empire State Manufacturing index leaping to 19.6 for the month, much better than the 7.0 estimate and the highest level since April 2022.
Retail Sector Under Pressure
Retail stocks are under pressure ahead of a major week of earnings for the sector as investors grow increasingly cautious on the consumer backdrop and discretionary spending, with the SPDR S&P Retail ETF down more than 6% this week, on pace for its fourth straight weekly decline and its worst weekly performance since October 2025, with weakness particularly focused in names like National Vision Holdings, Kohl's, Sally Beauty and Advance Auto Parts, all down double digits on the week.