Financial Markets                      06/26 15:33

   

   NEW YORK (AP) -- Most of the U.S. stock market rose Friday after oil prices 
eased back to where they were before the war with Iran, but drops for stocks 
swept up in the mania around artificial-intelligence technology kept the market 
in check.

   The S&P 500 finished nearly flat and slipped less than 0.1% to close out 
just its second losing week in the last 13. The Dow Jones Industrial Average 
dipped 44 points, or 0.1%, and the Nasdaq composite fell 0.2%.

   Stocks got a boost as the price of Brent crude oil, the international 
standard, dropped 3.8% to $72.60. That's lower than it was the day before the 
United States and Israel attacked Iran, which eventually led to the closure of 
the Strait of Hormuz and the curtailment of oil shipments worldwide.

   The easier oil prices helped stocks of companies with big fuel bills, and 
American Airlines Group climbed 1.7%.

   Health care stocks, meanwhile, were some of the strongest forces pushing 
upward on the market after a committee of the European Medicines Agency 
recommended several medicines for approval and the extension for another dozen 
of their therapeutic indications. That included one for Eli Lilly, whose stock 
jumped 7.1%.

   Besides Lilly, nearly two out of every three stocks within the S&P 500 rose. 
But more drops for AI stocks helped to overshadow them.

   After soaring to tremendous heights and leading the market for years, AI 
stocks have been under pressure recently because of worries their profits can't 
possibly keep pace with the tremendous rallies for their stock prices. And 
those drops have an outsized effect because AI stocks have become Wall Street's 
largest and most influential, giving movements for their stock prices more 
weight on indexes than others.

   Micron Technology's drop of 6.7% was the heaviest weight on the market, for 
example. The maker of memory for computers has been a big winner this year, 
with its stock roughly quadrupling, because the AI boom has created a surge of 
demand for its products.

   But investors saw the downside of that surge Thursday, when Apple said it 
had to raise prices on laptops and other products by significant percentages to 
make up for the increases in memory prices. The worry is that such higher 
prices could ultimately lead to lower demand.

   Highlighting the roller-coaster ride that AI stocks have been on, SpaceX 
briefly dropped 2.9% in the morning and fell below $149. It then erased the 
loss to swing to a gain of 3.5% before finishing with a modest rise of 0.2%.

   After initially selling its stock at $135 apiece in its ballyhooed initial 
public offering earlier this month, SpaceX's price briefly soared above $225 
within its first few days of trading. Besides rockets, Elon Musk's company also 
owns the xAI artificial-intelligence business.

   The day's largest loss in the S&P 500 was a 23.7% drop for ON Semiconductor, 
which said it agreed to buy Synaptics in an all-stock deal valued at roughly $7 
billion.

   All told, the S&P 500 slipped 3.47 points to 7,354.02. The Dow Jones 
Industrial Average dipped 44.51 to 51,876.11, and the Nasdaq composite fell 
60.99 to 25,297.62.

   In the bond market, Treasury yields eased with oil prices. The yield on the 
10-year Treasury fell to 4.37% from 4.40% late Thursday.

   It fell after a report showed expectations for inflation in the coming year 
inched down among U.S. consumers to 4.6% from 4.8% in May. That's still high, 
but moves downward mean less chance of a vicious cycle where expectations for 
higher inflation drive changes in behavior that create higher inflation.

   High yields in bond markets worldwide caused by worries about inflation have 
been threatening to slow economies, and they have already sent rates higher for 
mortgages and other kinds of loans. High yields also hurt prices for 
investments, particularly those seen as the most expensive. That raises the 
pressure on AI winners.

   Asian stock markets began Friday with sharp drops because of losses for AI 
winners.

   In Japan, a 12.5% plunge for Softbank Group Corp. helped pull the Nikkei 225 
index down by 4.2%. The company is a major investor in OpenAI, the maker of 
ChatGPT, and a report in The New York Times suggested OpenAI is considering 
delaying an initial public offering of its stock to next year from the second 
half of this year.

   Such an IPO would give OpenAI the chance to raise more cash to spend on data 
centers, as well as the opportunity for early investors like Softbank to cash 
out some of their holdings. But the recent stumbles for SpaceX's stock and for 
AI stocks broadly may be a signal of less appetite for big AI stocks among 
investors.

   In South Korea, SK Hynix fell 8.4%, and Samsung Electronics sank 5.3%. That 
helped pull the Kospi 5.8% lower and trim its gain for the year so far to 99.6%.

   ___

   AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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