Financial Markets                      07/16 15:28

   

   NEW YORK (AP) -- Drops for computer chipmakers and other winners of the 
artificial-intelligence boom dragged down stock markets worldwide on Thursday.

   The S&P 500 fell 0.5%, even though more stocks rose within the index than 
fell. The Dow Jones Industrial Average dipped 105 points, or 0.2%, and the 
Nasdaq composite sank 1.5%.

   Nearly three out of every four stocks rose within the S&P 500 after more of 
the country's biggest companies reported better earnings for the latest quarter 
than analysts expected.

   Abbott jumped 10.7% after the healthcare company delivered a fatter profit 
than expected and raised its forecast for earnings over the full year. J.B. 
Hunt Transport Services climbed 8% after the freight company likewise topped 
analysts' expectations for the latest quarter.

   But a 1% move for Nvidia's stock packs more punch on the S&P 500 than a 1% 
move for any other company because it's the largest on Wall Street by value.

   And Nvidia fell 2.4%, making it the heaviest weight on the index. Other AI 
winners also sank, giving back some of their stellar gains.

   Micron Technology fell 5.6% to shave its gain for the year so far below 
199%. Sandisk fell 12.6% but is nevertheless up 494% for the year so far. 
Western Digital sank 9.2% but is still up 171% for the year so far.

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

   All told, the S&P 500 fell 38.63 points to 7,533.77. The Dow Jones 
Industrial Average dropped 105.67 to 52,552.97, and the Nasdaq composite sank 
387.28 to 25,881.95.

   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 2.3%.

   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 had drops of 8.9%, 7.8% and 
5.3% in the last couple 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.

   Oil prices are near their highest in a month because of worries that the war 
with Iran will keep oil tankers out of the Strait of Hormuz and prevent 
shipments of crude from the Persian Gulf to customers worldwide.

   The price for a barrel of Brent crude briefly climbed above $86 per barrel 
in the morning before erasing the gain and falling back to settle at $84.23, 
down 0.8% from the day before.

   In the bond market, the 10-year Treasury yield edged up to 4.56% from 4.55% 
late Wednesday and just 3.97% before the war with Iran began. Higher yields 
have already sent the average 30-year mortgage rate to its highest level in 
nearly a year.

   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 after ignoring sales at 
gasoline stations, spending by U.S. consumers remained 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.

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

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