NEW YORK (AP) — Oil prices jumped Monday following a weekend of attacks in the Middle East, while more losses for computer chip companies and other winners of the artificial-intelligence boom dragged stock markets lower.
The price for a barrel of Brent crude oil, the international standard, climbed 9.6% to $83.30 after the United States and Iran each said the Strait of Hormuz is under its control. Fighting in the region has kept oil tankers from using
the strait to deliver crude to customers from the Persian Gulf, which drives up fuel prices worldwide.
The gains for oil prices accelerated immediately after President Donald Trump said he’s reinstating a blockade to prevent tankers carrying Iranian oil from using the strait. He also called for 20% payments on all cargo shipped through it to reimburse the United States for providing protection in the area.
Brent’s price, though, remains well below its wartime peak of nearly $120 per barrel for its most actively traded contract.
On Wall Street, the S&P 500 fell 0.8%, coming off its fourth winning week in the last five. The Dow Jones Industrial Average dropped 138 points, or 0.3%, and the Nasdaq composite sank 1.6%.
Chip stocks like Micron Technology helped lead the way lower. Micron fell 4.4%, eating into what had been a stellar rise of 243.1% for the year so far.
Real profits are behind the rise because the AI rush has created surging demand for computer memory and other computing building blocks. But worries are rising that stock prices have shot too high and that the demand may not be sustainable if AI doesn’t deliver as much profit and productivity as expected.
Nvidia fell 3.5%. Because it’s the largest stock on Wall Street by value thanks to the euphoria around AI, it was the single heaviest weight on the S&P 500.
The day’s losses began in Asia, where South Korea’s Kospi index dropped 8.9%. That included a 15.4% plunge for SK Hynix’s stock in Seoul, the worst since it began trading in 1997.
The South Korean tech giant just launched shares of its stock trading in the United States on Friday, raising roughly $26.5 billion. Those shares jumped 13.1% in their first day of trading, but they fell 9.3% Monday.
Other areas of the AI industry held up a bit better, and Taiwan Semiconductor Manufacturing Co.’s shares in Taiwan rose 1%. The chipmaker said its revenue in June soared nearly 68% from a year earlier, bringing its total revenue growth for the first half of the year to 35.6% from a year earlier.
But TSMC’s stock that trades in the United States fell 2.9% later in the day.
All told, the S&P 500 fell 60.06 points to 7,515.34. The Dow Jones Industrial Average dropped 138.37 to 52,498.64, and the Nasdaq composite sank 408.43 to 25,873.18.
Much of Wall Street’s attention this week will be on profit reports from companies saying how much they earned during the spring. On Tuesday alone, Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo are all releasing their latest quarterly results.
Analysts are forecasting that companies in the S&P 500 index will deliver overall growth of 23.6% from a year earlier, according to FactSet. If they’re right, it would be the second straight quarter of growth better than 20%.
Companies across industries will need to deliver strong growth to justify the big moves their stock prices have made. Indexes are near records despite their sharp recent swings due to worries around AI stocks.
Companies usually turn in results that top analysts’ expectations, including in 37 of the past 40 quarters, according to FactSet. If they do so again by the usual margin, earnings growth for S&P 500 companies in the latest quarter could end up being the best since 2021.
In the bond market, Treasury yields rose with the price of oil. The yield on the 10-year Treasury climbed to 4.61% from 4.56% late Friday and from just 3.97% before the war with Iran began.
Yields have risen worldwide on worries about expensive oil and high inflation, which could push the Federal Reserve and other central banks to raise interest rates. Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.
In stock markets abroad, indexes moved modestly in Europe.
In Asia, the swings were sharper, beyond South Korea’s plunge. Stocks fell 2.1% in Shanghai, and Japan’s Nikkei 225 dropped 1.9%
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed to this report.
