Sinking AI stocks pull Wall Street further from its record

NEW YORK (AP) — Wall Street is pulling further from its all-time high on Tuesday as AI stocks get back to sinking.

The S&P 500 fell 0.5% and is on track for a third straight modest loss since setting its all-time high on Thursday. The Dow Jones Industrial Average was down 131 points, or 0.2%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 1.1% lower.

Leading the way lower were stocks that have been big winners in the boom around artificial-intelligence technology. They’ve been veering up and down this summer on worries that their prices shot too high in the AI frenzy and that the strong demand for memory, processors and other building blocks of data centers may fizzle out if AI proves less profitable than promised.

Micron Technology dropped 3.5%, and the seller of computer memory was one of the heaviest weights on the S&P 500. So were chip companies Nvidia, which fell 1.6%, and Broadcom, which sank 2.2%.

Even with their recent swings, such stocks remain big winners. Micron, for example, has more than tripled this year.

But stocks that critics call too expensive get more scrutiny when interest rates are rising, and yields remained high in bond markets worldwide Tuesday.

The yield on the 10-year U.S. Treasury held at 4.72%, where it was late Monday. That's up from just 3.97% before the war with Iran began. The 30-year Treasury yield, meanwhile, is near its highest level since 2007.

Yields have been jumping since the war began because high oil prices are pushing upward on inflation and raising the pressure on the Federal Reserve and other central banks to hike interest rates. All the while, continuing worries about huge debt loads for governments and their increases in borrowing keep yields high.

The bond market often runs in the background, but it’s powerful enough to sway markets and government leaders worldwide, including President Donald Trump. When yields are high, investors are less willing to pay high prices for stocks and other kinds of investments, particularly those seen as the most expensive.

Much of the pressure on yields has come from oil prices, and the price for a barrel of Brent crude rose 0.6% to $91.45. It’s been swinging sharply on uncertainty about when and whether the United States and Iran can reach a deal to allow oil tankers to exit the Persian Gulf freely again.

In stock markets abroad, indexes were mixed in Europe and Asia.

South Korea’s Kospi has been home to some of the world’s sharpest AI-induced swings because it’s dominated by two tech giants, Samsung Electronics and SK Hynix. The index fell 1.5%, which counts as relatively modest move for it. It had swung by at least 2.4% in each of its three prior days.

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