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AI, Oil Prices Weigh on Wall Street 04/28 15:28
Sinking AI stocks and another climb in oil prices because of the Iran war
helped pull Wall Street off its record heights on Tuesday.
NEW YORK (AP) -- Sinking AI stocks and another climb in oil prices because
of the Iran war helped pull Wall Street off its record heights on Tuesday.
The S&P 500 fell 0.5% from its latest all-time high. The Dow Jones
Industrial Average dropped 25 points, or 0.1%, while the Nasdaq composite fell
0.9% from its own record.
Stocks in the artificial-intelligence industry led the way lower. Chip
company Broadcom was the heaviest weight on the S&P 500 after sinking 4.4%.
Drops of 1.6% for Nvidia and 3.9% for Micron Technology also undercut the
market.
The weakness came after a report in The Wall Street Journal said some
leaders at OpenAI are concerned about whether it can support its massive
spending on data centers after missing targets for new users and revenue. If
the maker of ChatGPT pulls back on its investments, it could bolster criticism
that the entire AI industry is in a bubble of over-the-top spending that may
not produce the profits and productivity that would make it all worth it.
The drops came just a day before several of the biggest spenders on AI are
scheduled to report their latest results for the start of 2026. They could
offer more clues on whether all the investment in AI is producing the kind of
returns that shareholders care about.
Alphabet, Amazon, Meta Platforms and Microsoft are all reporting their
latest quarterly results on Wednesday.
Also weighing on the stock market was another rise for oil prices on
continued uncertainty about what will happen with the Iran war.
The price for a barrel of Brent crude oil to be delivered in June climbed
2.8% to settle at $111.26. Brent to be delivered in July, which is where more
of the trading is happening in the oil market, rose 2.7% to $104.40.
After sitting around $70 in late February, Brent prices are moving closer to
their peak of $119 reached when worries about the war have been at their
heights.
The focus is on the Strait of Hormuz, whose effective closure is keeping oil
tankers stuck in the Persian Gulf instead of heading to customers worldwide.
The Trump administration seemed unlikely Tuesday to accept Iran's offer to
reopen the Strait of Hormuz if the U.S. lifts its blockade on the country.
The proposal would postpone discussions on the Islamic Republic's nuclear
program, something that U.S. Secretary of State Marco Rubio appeared to rule
out in a Fox News interview Monday.
Meanwhile, the average price for a gallon of gasoline in the United States
reached $4.18 on Tuesday, the most since 2022, according to the auto club AAA.
Expensive fuel was one of the reasons JetBlue Airways reported a worse loss
for the start of 2026 than analysts expected.
But its stock nevertheless rose 1.2% after CEO Joanna Geraghty said the
airline saw demand from customers strengthening through the quarter. JetBlue
also announced moves to rein in fuel costs, such as cutting some flying.
Another stock helping to limit Wall Street's losses was Coca-Cola's. It
rallied 3.9% after reporting stronger profit and revenue for the latest quarter
than analysts expected, thanks in part to strength from China, the United
States and India.
All told, the S&P 500 fell 35.11 points to 7,138.80. The Dow Jones
Industrial Average dropped 25.86 to 49,141.93, and the Nasdaq composite sank
223.30 to 24,663.80.
In the bond market, Treasury yields held relatively steady after a report
showed U.S. consumers are feeling slightly more confident in April, when
economists expected to see a decline. The yield on the 10-year Treasury
remained at 4.35%, where it was late Monday.
On Wednesday, the Federal Reserve is set to announce its latest decision on
short-term interest rates. The widespread expectation is that it will hold the
federal funds rate steady and hold off on resuming its cuts. Lower interest
rates would help the economy, but they also risk worsening inflation when oil
is expensive and tariffs are threatening to push prices higher.
Also Wednesday, the Senate Banking Committee will vote on whether to confirm
President Donald Trump's nominee, Kevin Warsh, to succeed Fed Chair Jerome
Powell. The committee is expected to approve Warsh and send his nomination to
the full Senate.
In stock markets abroad, indexes fell across much of Europe and Asia.
Japan's Nikkei 225 sank 1% for one of the world's larger losses after the
Bank of Japan opted in a split vote to keep its key interest rate unchanged.
"There are various risks to the outlook," it said in a statement. "For the
time being it is necessary to pay particular attention to the impact of the
future course of the situation in the Middle East."
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