India, May 12 -- Wall Street pulled back sharply on Tuesday as investors reacted to hotter than expected inflation data, rising geopolitical tensions between the United States-Iran and renewed weakness in technology stocks. The pullback interrupted the recent rally that had pushed the S&P 500 and Nasdaq to fresh record highs earlier this week.

Markets turned defensive after annual US inflation climbed to 3.8% in April, exceeding economist expectations of 3.7%. At the same time, crude oil prices surged above $100 per barrel following concerns over the Strait of Hormuz and stalled diplomatic progress between Washington and Tehran.

The combination of sticky inflation, elevated oil prices and uncertainty surrounding interest rates created a...