AI stocks slump again, while oil prices keep rising

NEW YORK (AP) — Computer chipmakers and other winners of the artificial-intelligence boom are slumping again Thursday and dragging stock markets down worldwide. Oil prices , meanwhile, continue to climb because of the war with Iran .

The S&P 500 fell 0.3%, a day after it pulled back within 0.5% of its all-time high set last month . The Dow Jones Industrial Average was down 21 points, or less than 0.1% as of 10 a.m. Eastern time, and the Nasdaq composite was 0.9% lower.

AI winners like Micron Technology led the way lower, and the maker of computer memory fell 3.7%. It’s still up a stellar 205% for the year so far because of soaring demand for its products in the AI investment boom.

Sandisk fell 6.4% but is still up 537% for the year so far. Western Digital sank 5.6% but is still up 181% for the year so far.

Nvidia's fall of 2.3% was the single heaviest weight on the S&P 500 because it's grown into the largest on Wall Street by value, giving it the most influence.

Such stocks have been under pressure for weeks because of worries that their prices simply shot too high and that the strong demand for computer memory and processors may not be sustainable if AI ends up not producing as much profit and productivity as promised.

The losses came even though Taiwan Semiconductor Manufacturing Co. , a bellwether of the chip industry, reported a stronger profit for the latest quarter than analysts expected. Its stock in Taiwan rose 1.2%, but its stock that trades in the United States fell 2.2%.

In South Korea, drops for AI winners like Samsung Electronics and SK Hynix dragged the Kospi index down 6.4%. It’s been among the world’s shakiest markets in recent weeks because of how dominant the two AI winners are in it.

The day before, the Kospi jumped 6.2%, but it’s also had drops of 8.9%, 7.8% and 5.3% in the last two weeks.

A hike to interest rates by the Bank of Korea also weighed on stocks in Seoul, the first by the bank since 2023.

Higher interest rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments. And worries are rising that the Federal Reserve and other central banks around the world may have to raise rates to rein in the effects of expensive oil.

The price for a barrel of Brent crude rose another 0.6% to $85.43 Thursday and is near a one-month high. The Strait of Hormuz is at the center of fighting between the United States and Iran, and the worry is that oil tankers won’t be able to use it to carry crude from the Persian Gulf to customers worldwide.

That rise in oil prices helped send the 10-year Treasury yield to 4.58% from 4.55% late Wednesday and just 3.97% before the war with Iran began.

Reports on the U.S. economy came in mixed, which added to the eddies swirling through the bond market. One report said shoppers spent less at U.S. retailers last month than economists expected . But underlying trends were perhaps more encouraging. After ignoring sales at gasoline stations, U.S. consumers remain resilient.

A separate report said fewer U.S. workers applied for unemployment benefits last week, an indication of a solid job market, while a third report said manufacturing in the mid-Atlantic region is better than economists expected.

In stock markets abroad, indexes fell across much of Europe and Asia, including drops of 1.8% in Shanghai and 2.8% in Tokyo.

Hong Kong’s Hang Seng was an outlier and rose 1.3%. Alibaba rose after China’s cyberspace regulator said Wednesday it had approved the Apple Intelligence AI tool for use in China. An Alibaba spokesperson said its Qwen model will be integrated into Apple Intelligence.

AP Business Writers Chan Ho-him and Matt Ott contributed to this report.