U.S. stocks dived on Friday as investors pulled back from record highs amid renewed inflation concerns, rising Treasury yields, and disappointment over unresolved semiconductor trade tensions between Washington and Beijing. Markets turned risk-off after reports confirmed that recent diplomatic talks between the U.S. and China failed to produce meaningful progress on chip export restrictions, a key issue for the technology sector and broader AI trade.
The tech-heavy Nasdaq Composite led declines, falling roughly 1.4%, while the S&P 500 dropped 1.1% after notching fresh all-time highs earlier this week. The Dow Jones Industrial Average lost more than 500 points, slipping back below the closely watched 50,000 level as investors grappled with hotter inflation data, climbing oil prices, and a sharp move higher in bond yields.
Market Movers:
- Figma (FIG) +11% — Shares surged after the digital design platform posted stronger-than-expected first-quarter results, with revenue jumping 46% year over year to $333.4 million and adjusted earnings beating Wall Street forecasts. Investors also cheered upbeat guidance and accelerating adoption of the company’s AI-powered design tools, while net dollar retention climbed to its highest level in more than two years.
- Papa John’s (PZZA) +10% — Shares rallied following reports that major franchisee Nadeem Bajwa is backing a potential takeover bid alongside Irth Capital and Brookfield Asset Management. The proposed offer reportedly values the pizza chain at roughly $47 per share, fueling speculation about broader consolidation in the restaurant industry.
- POET Technologies (POET) -12% — Shares tumbled after the company announced a $400 million registered direct offering tied to manufacturing expansion and future acquisitions. Investors appeared concerned about dilution despite management outlining ambitious growth plans tied to AI optical networking infrastructure.
- Nu Holdings (NU) -5% — Shares declined after the fintech company reported quarterly revenue and earnings that fell short of analyst expectations. While customer growth remained strong and management highlighted expanding AI integration across lending and credit operations, softer purchase volume weighed on sentiment.
- Taiwan Semiconductor Manufacturing (TSM) -3% — Shares slipped after the chip giant disclosed plans to reduce its stake in Vanguard International Semiconductor through a large institutional block sale. Investors interpreted the move as part of a broader effort to streamline capital allocation while maintaining focus on core semiconductor manufacturing operations.
Treasury Yields Flash Warning Signs
One of the biggest stories driving Friday’s sell-off was the ongoing surge in Treasury yields. The benchmark 10-year Treasury yield climbed above 4.5%, while the 30-year yield moved past 5% for the first time since 2007, tightening financial conditions and raising concerns about higher borrowing costs across the economy.
The sharp rise in yields reflects growing fears that inflation could remain stubbornly elevated for longer than expected. This week’s hotter-than-anticipated CPI and PPI reports have significantly reduced hopes for Federal Reserve rate cuts later this year, with some traders now beginning to price in the possibility of further tightening if inflation pressures worsen.
AI Trade Faces New Geopolitical Headwinds
Technology and semiconductor stocks also came under pressure after investors learned that recent high-level talks between the U.S. and China failed to resolve ongoing disputes surrounding semiconductor export restrictions. The lack of progress renewed uncertainty around AI supply chains and global chip demand at a time when the AI boom has become a key driver of market gains.
Despite the tensions, AI enthusiasm remains strong across Wall Street. Nvidia and several major chipmakers secured new business discussions during President Trump’s summit with Chinese President Xi Jinping, but investors appear increasingly worried that geopolitical friction could disrupt the sector’s rapid expansion. Meanwhile, the broader AI infrastructure race continues fueling enormous spending across cloud computing, networking, data centers, and advanced semiconductor manufacturing. Investors are now balancing that long-term optimism against rising geopolitical and macroeconomic risks.
Commodities Rally Adds to Inflation Concerns
Oil prices moved higher again as the market continued watching the ongoing conflict involving Iran and the uncertainty surrounding global energy supply routes. Brent crude climbed above $108 per barrel, extending a rally that has already added significant inflationary pressure across transportation, manufacturing, and consumer goods.
At the same time, strategists increasingly argue that the market may be entering a broader commodities supercycle fueled by deglobalization, supply constraints, and surging AI infrastructure demand. Industrial metals, energy products, and raw materials tied to data center construction have all seen substantial gains this year. That backdrop has amplified concerns that inflation could remain elevated well into 2027, complicating the Federal Reserve’s path forward and creating additional volatility for equity markets.
Looking Ahead
Investors now turn their attention toward next week’s economic data and any additional developments from the Trump-Xi summit fallout. Markets will be watching closely for signals from Federal Reserve officials, particularly as rising bond yields and persistent inflation continue reshaping expectations for interest rates. At the same time, the AI trade remains one of the market’s most powerful long-term themes, even as geopolitical tensions and valuation concerns create near-term volatility. Whether stocks can stabilize may ultimately depend on whether inflation pressures ease and whether global leaders can make progress on trade and semiconductor policy in the weeks ahead.