Bond yields just broke the AI rally.
Stocks sold off Friday morning.
The 10-year Treasury yield hit its highest level in about a year.
The S&P 500 had closed at a record the day before. By midmorning, the AI trade was the day's biggest loser.
The S&P 500 dropped 0.9% in morning trade. The Nasdaq fell 1.2%.
The Dow shed more than 450 points. It dipped back below 50,000.
Chipmakers led the slide. Nvidia fell 3% at the open.
Semiconductors had been the biggest winners of the recent run-up. Now they are the biggest source of cash for traders cutting bets.
Higher yields make tech stocks worth less on paper. They also make safe bonds more attractive than risky AI bets.
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The 10-year yield rose to 4.57% Friday. That is the highest in about a year.
The 30-year crossed 5.12%. That is the highest level since June 2007.
The trigger was this week's hot inflation data. April producer prices rose 6% year over year.
Traders now think the Fed may need to hike rates, not cut, to keep prices in check.
Trump's two-day summit with Chinese President Xi Jinping wrapped Thursday in Beijing. There was no progress on Iran.
Oil rose another 2% on the news.
Rising yields tend to hit growth stocks hardest.
That is because their value depends on profits years out. Those profits get cut more heavily when rates are higher.
That is why the chip and AI names are taking the brunt of today's move. Bond-heavy sectors are holding up better.
Gold also pulled back. It fell 2.7% to about $4,555 an ounce as the dollar climbed.
Silver fell 8% to about $78 an ounce. Copper also dropped roughly 5%.
The dollar index climbed to 99, its highest level in over a month.
Not every name was red on Friday.
Figma stock jumped about 9% after raising its full-year revenue outlook to $1.42-$1.43 billion. The design platform cited strong demand from AI work.
Applied Materials reported sales that topped estimates. The chip-tool maker also guided ahead.
Boeing shares were roughly flat after Trump's Beijing trip yielded a 200-plane China order.
Asian stocks led the global slide overnight. Japan's Nikkei fell 1.8%. South Korea's KOSPI dropped more than 5% after crossing 8,000 for the first time.
Japan's wholesale inflation also hit 4.9% in April. That is the fastest pace in three years.
The reading keeps the Bank of Japan on track to raise rates.
The 10-year yield broke 4.5%. The 30-year crossed 5%.
Both are levels that have historically tightened financial conditions enough to bite into corporate borrowing.
Stocks have been rallying on AI. Yields just handed them the first real pushback.
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