Financial Markets                      06/26 12:50

   

   NEW YORK (AP) -- Most of the U.S. stock market is rising Friday after oil 
prices eased back to where they were before the war with Iran, but drops for AI 
stocks are keeping the market in check.

   The S&P 500 rose 0.5% after recovering from an early loss of 0.9%. The index 
at the heart of many 401(k) accounts is still on track for its second losing 
week in the last 13, largely because of drops for stocks swept up in the mania 
around artificial-intelligence technology.

   The Dow Jones Industrial Average was up 194 points, or 0.4%, as of 11:45 
a.m. Eastern time, and the Nasdaq composite was 0.5% higher.

   Stocks got a boost as the price of Brent crude oil, the international 
standard, dropped 4.5% to $72.13. 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 
United Airlines climbed 2.1%.

   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 6.8%.

   Besides Lilly, roughly two out of every three stocks within the S&P 500 were 
rising. But more drops for AI stocks were helping to overshadow them.

   After soaring to tremendous heights and leading the market for years, AI 
stocks 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 grown into Wall 
Street's largest and most influential, giving movements for their stock prices 
more weight on indexes than others.

   Micron Technology's drop of 3.3% 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 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 many other of its 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 below $149 in the morning, a loss of 2.9%, before pulling 
higher to a gain of 2.2%.

   After initially selling its stock at $135 apiece in its ballyhooed initial 
public offering earlier this month, the 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 21.6% drop for Onsemi, which 
said it agreed to buy Synaptics in an all-stock deal valued at roughly $7 
billion.

   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 got some help from a report showing that 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 
down by 4.2%. The company is a major investor in OpenAI, the maker of AI 
chatbot 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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