U.S. stock markets closed lower for the week, with all three major indexes posting declines of 1.2% or more despite softer inflation data. The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all ended the week in negative territory, marking their worst weekly performance since November.

The market's reaction reflects a complex interplay between encouraging inflation readings and persistent concerns about artificial intelligence sector valuations. Investors appeared to weigh the potential for more accommodative Federal Reserve policy against growing unease about AI stock valuations, which have driven much of the market's gains this year. The inflation data provided some relief, suggesting price pressures may be easing, but this positive news was overshadowed by broader market anxiety.

This week's selloff highlights the market's fragile sentiment as traders navigate conflicting signals. While inflation data offered hope for potential interest rate cuts, the sharp pullback in tech and AI-related stocks suggests investors are becoming increasingly cautious about stretched valuations in these sectors. The market's mixed response underscores the delicate balance between economic optimism and valuation concerns.