NEW YORK — The S&P 500 fell sharply Thursday, closing at 7,426.99 as a broad tech sell-off combined with hotter-than-expected inflation data and persistent geopolitical tensions from the Middle East conflict triggered a cautious retreat across Wall Street.

The benchmark index dropped 74.25 points, or 0.99 percent, in a session marked by heavy profit-taking in artificial intelligence-related names and renewed worries about the Federal Reserve’s path on interest rates. The Dow Jones Industrial Average declined more modestly, while the Nasdaq Composite posted the steepest losses among major indices as technology giants came under pressure.

Trading volume spiked as investors digested April inflation figures showing consumer prices rising 3.8 percent year-over-year — the highest reading since May 2023 — and producer prices jumping 6 percent. Oil prices remained elevated near $107 per barrel amid ongoing disruptions in the Strait of Hormuz, adding to inflationary concerns and reducing expectations for near-term rate cuts under the new Fed leadership.

Tech Sector Bears Brunt of Selling

Technology shares led the decline, with several mega-cap names giving back recent gains. Investors appeared to take profits after a strong run fueled by AI enthusiasm, while fresh worries about the sustainability of massive capital spending on artificial intelligence infrastructure added to the pressure. The sector’s heavy weighting in the S&P 500 amplified the index’s drop.

Energy stocks provided some offset as oil prices held firm, but broader market sentiment remained defensive. Financials traded mixed amid shifting rate expectations, while defensive sectors like consumer staples and utilities outperformed relatively.

Inflation and Geopolitics Fuel Uncertainty

The hotter inflation print reinforced concerns that the Federal Reserve may keep rates higher for longer. Traders now see fewer rate cuts priced in for the remainder of 2026, pressuring growth-oriented stocks sensitive to borrowing costs. The 10-year Treasury yield climbed above 4.48 percent, its highest level since July 2025, reflecting the shift in expectations.

Geopolitical risks continued to loom large. The ongoing U.S.-Iran conflict has kept energy prices elevated and created uncertainty around global supply chains. Analysts warn that prolonged disruption could further complicate the inflation picture and weigh on corporate margins.

Analyst Views on the Pullback

Market strategists described the move as a healthy correction within a broader uptrend rather than the start of a major downturn. “We’ve seen strong gains driven by AI optimism, so some consolidation was expected,” said one New York-based portfolio manager. “The inflation data simply provided a catalyst for profit-taking in the more extended parts of the market.”

Technical analysts noted the S&P 500 had been testing resistance levels near recent highs. Support sits around the 7,300 level, with further downside possible if inflation readings continue surprising to the upside. However, many remain constructive on the longer-term outlook, citing resilient corporate earnings and ongoing innovation in technology sectors.

Corporate Earnings Provide Mixed Signals

Earnings season has delivered mostly solid results, but guidance from some high-profile names has introduced caution. Companies exposed to consumer spending and discretionary sectors have highlighted margin pressures from higher input costs, while technology firms continue to emphasize long-term AI investments despite near-term volatility.

The divergence between sectors underscores a market in transition — rewarding companies with strong pricing power and durable growth stories while punishing those more exposed to cyclical or inflationary headwinds.

Investor Sentiment and Strategy Shifts

Retail and institutional investors alike have grown more tactical. Many have rotated toward defensive areas or increased cash holdings while monitoring upcoming economic data. The VIX, Wall Street’s fear gauge, ticked higher but remained below levels typically associated with major panic.

Longer-term investors view the pullback as a potential buying opportunity, particularly in quality names that have been caught in the broader sell-off. “Volatility creates entry points,” said one wealth manager. “The underlying trends — innovation, productivity gains from AI, and a resilient economy — remain intact.”

Global Markets Reflect Caution

International markets showed similar caution. European indices closed modestly lower, while Asian markets had a mixed session overnight. The U.S. dollar strengthened modestly as a safe-haven currency, and gold prices edged higher amid uncertainty.

Looking ahead, investors will focus on upcoming inflation readings, consumer confidence data, and further corporate earnings. Any signs of cooling in the labor market or easing price pressures could revive hopes for rate relief later in the year.

Broader Economic Picture

Despite the market volatility, the U.S. economy has shown resilience. Consumer spending remains steady, and corporate balance sheets are generally healthy. However, higher-for-longer interest rates, elevated energy costs, and geopolitical risks create a challenging backdrop that requires careful navigation by both policymakers and investors.

The S&P 500’s performance this year has been marked by periodic sharp moves, reflecting the tug-of-war between optimism around technological progress and concerns over macroeconomic headwinds. Thursday’s decline fits this pattern — a reminder that even in a fundamentally supportive environment, markets can experience meaningful corrections.

The index closed the session at 7,426.99. Whether this represents a short-term pause or the beginning of a deeper consolidation will depend on how incoming data and corporate results influence sentiment in the days ahead. For now, caution prevails as investors await clearer signals on the inflation trajectory and the Fed’s response.

The market’s reaction underscores the sensitivity of equities to inflation surprises and geopolitical developments. As summer approaches, participants will continue balancing growth expectations with risk management in an environment that remains full of both opportunity and uncertainty.

U.S. stocks retreated from artificial-intelligence-fueled record highs on ​Friday, as spiking crude prices ignited global inflation fears.

All three major U.S. stock indexes veered lower as a jump in benchmark Treasury yields, reflecting surging energy prices and concerns about long-term inflation, offered an attractive alternative to higher-risk equities.

“There’s a realization that the market had gotten way ahead of itself,” said Kenny Polcari, ‌chief market strategist ⁠at Slatestone Wealth ⁠in Jupiter, Florida. “It wasn’t paying enough attention to what the bond market and economic data is telling it. It was caught up in this momentum AI trade.” Crude ​prices surged after combative comments from U.S. President Donald Trump and Iran’s Foreign Minister Abbas Araqchi raised doubts as to whether their countries’ fragile truce ​would hold and dampened hopes that normal traffic through the crucial Strait of Hormuz would soon resume. Trump’s meeting with Chinese President Xi Jinping concluded with few tangible results to show for it, with Beijing offering no clear help toward resolving the U.S.-Iran conflict.

“It certainly was ​encouraging to see both countries engaging again at the highest level. Historically, these type ⁠of events bring ‌about headlines outlining various commitments,” said Matthew Keator, managing partner at the Keator Group, a wealth management firm ​in Lenox, Massachusetts. “This week’s ​meeting seemed like more of a reset in relations between the two countries and less short-term, quantifiable ⁠results.”

The yield on 10-year Treasury notes, an indicator of global borrowing costs, touched its ​highest level since May 2025, when markets were reeling from Trump’s “Liberation Day” tariff proclamation. Global bond ​yields also jumped on growing evidence of the Iran war’s widespread economic damage.

END OF POWELL ERA
Friday marks Jerome Powell’s last day as U.S. Federal Reserve chair, a position he has held through the pandemic, periods of inflation, and interest rate hiking and cutting cycles.Incoming Chair Kevin Warsh is saddled with the potential need for a rate hike if a protracted Iran war leads to sticky inflation.

“The weakness today is highlighting the concerns that the recent (inflation) numbers aren’t transient, and it’s hard to envision the new chair communicating anything other than ‌a neutral policy stance at best until we see some consistent, meaningful change in the data,” Keator added.

The odds of the Fed hiking interest rates by 25 basis points in December are approaching 40%, up from ​13.6% a week ​ago, according to CME Group’s FedWatch tool.

According ⁠to preliminary data, the S&P 500 lost 91.62 points, or 1.22%, to end at 7,409.62 points, while the Nasdaq Composite lost 412.61 points, or 1.53%, to 26,226.35. The Dow Jones Industrial Average fell 537.35 points, or 1.06%, to 49,531.70.

The Philadelphia SE Semiconductor Index was dragged lower ​by stocks that have benefited from the AI hyperscaler phenomenon.

Nvidia, AMD and Intel ended the session sharply lower. Microsoft rose following the disclosure of a new position in the company taken by Bill Ackman’s hedge fund Pershing Square. Dexcom jumped after the medical device maker’s announcement that it will appoint two independent directors and revamp a board committee in collaboration with activist investor Elliott Investment Management.

Ford slid, retreating from a near 21% surge over the last two sessions on optimism over the automaker’s energy storage business.

The Indian government has approved the proposal for the listing and disinvestment of Mahanadi Coalfields Limited (MCL), paving the way for the coal producer’s potential stock market debut through an initial public offering (IPO).

According to an official communication, the Department of Investment and Public Asset Management (DIPAM) and the Ministry of Coal had placed the proposal before the Alternative Mechanism (AM) after securing approvals from the boards of Coal India Limited (CIL) and MCL.

MCL, a wholly owned subsidiary of Coal India, is among India’s largest coal-producing companies with operations concentrated in Odisha. The listing would mark another major divestment initiative by the Centre as it seeks to deepen capital markets participation in state-run enterprises.

The AM has now cleared the proposal, allowing CIL to dilute its stake in MCL through an offer for sale (OFS) as part of the IPO and through additional tranches subsequently. The approval also allows MCL to raise fresh capital through issuance of equity shares during the IPO and later via follow-on public offers (FPOs), qualified institutional placements (QIPs) or other Sebi-approved routes.

The government said the disinvestment and fundraising exercises may be carried out either simultaneously or separately and could take place in multiple tranches. However, the total dilution under these mechanisms will be capped at reducing Coal India’s stake in MCL by up to 25%.

The proposed listing will remain subject to prevailing market conditions and completion of statutory and regulatory requirements.
One of Coal India’s subsidiaries, Central Mine Planning and Design Institute Ltd (CMPDI) was listed in March 2026 via an IPO route. Its IPO was a book built issue of Rs 1,841.45 crores and the issue is entirely an offer for sale of 10.71 crore shares. The public issue was launched at a price of Rs 172 per share. Its shares are currently trading at Rs 232.95 on the NSE.Meanwhile, Coal India shares ended at Rs 462.20, gaining by Rs 8.15 or 1.79% over the Thursday closing price.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

Capital markets regulator Sebi and the Central Board of Direct Taxes have eased several PAN-related compliance requirements for foreign portfolio investors (FPIs) after concerns emerged over difficulties in onboarding under the previously notified income-tax rules.

In a statement issued on Friday, Sebi said CBDT has provided multiple clarifications to simplify the PAN allotment process for FPIs following stakeholder feedback on the new Income-tax Rules, 2026 and revised PAN application forms notified in March this year.

The issue had arisen after the updated PAN forms introduced additional mandatory fields including taxpayer identification number details, representative assessee information and compulsory mobile number disclosure requirements.

Foreign investors and market intermediaries had raised concerns that many of these requirements were difficult to comply with across multiple jurisdictions, potentially complicating the onboarding process for FPIs investing in Indian markets.

Sebi said it actively engaged with CBDT after receiving representations from stakeholders to ensure that the PAN issuance framework remained smooth and investor-friendly.

Under the revised clarifications, CBDT said the name of the authorised signatory mentioned in the Common Application Form (CAF) would be sufficient for the representative assessee or authorised representative field in PAN applications.
The tax department also clarified that the liability of the authorised signatory would remain limited only to the purpose of applying for PAN and that no supporting documents related to the authorised signatory or representative assessee would be required.CBDT further eased address and contact-related compliance requirements. According to the clarification, if details such as mobile number, landline number or email address of the authorised signatory are unavailable, FPIs may provide their own contact information instead.

In another relief measure, CBDT said that if PAN, Aadhaar or passport details of the authorised signatory are unavailable, the FPI registration number can be furnished in the application.

The tax authority also addressed concerns around taxpayer identification numbers for jurisdictions where such systems do not exist.

CBDT clarified that in cases where TIN or an equivalent number is not applicable, applicants may fill the field using the value “0000000000”. Additionally, if an FPI does not have a mobile number, it may provide a landline number instead while furnishing contact details.

Sebi said the latest measures are aimed at ensuring continued ease of onboarding for foreign portfolio investors.

FPIs currently use a single Common Application Form for multiple regulatory processes including Sebi registration, opening bank and demat accounts and obtaining PAN registration in India.