Stocks Climb as Traders Bet on Rate Cuts After Inflation Cools

Stocks suffered their worst weekly decline since November 2023, closing lower as investor sentiment soured despite cooling inflation data. AI-driven disruption fears dominated trading, with concerns that rapid automation could erode corporate profits, overshadowing potential Fed rate cuts. Cooling inflation had initially sparked optimism for Federal Reserve rate reductions, but AI-related earnings risks outweighed monetary policy hopes. The sell-off reflected a broader market shift, as traders reassessed tech-heavy portfolios amid uncertainty over AI’s long-term economic impact. Analysts warn the tension between inflation relief and AI disruption may persist, creating volatility until clearer corporate earnings trends emerge.