NEW YORK — Stock markets are lower on Friday on further volatility in computer chip companies and other winners of the artificial intelligence boom. Meanwhile, oil prices continue to rise due to the war with Iran.
The S&P 500 fell 0.5% after falling as much as 1.4% in the morning. It was the first week of decline in the past three weeks and the third week since March, just days after rising to within 0.5% of its all-time high.
The Dow Jones Industrial Average was down 149 points, or 0.3%, as of 12:53 p.m. ET, after bouncing between an early drop of 566 points and modest gains. The Nasdaq Composite fell 0.7%.
Chip stocks were again at the center of the turmoil. They have been under pressure for weeks over concerns that strong demand for computer memory and processors could become unsustainable if prices rise too high and AI ends up delivering less profits and productivity than promised.
Applied Materials fell 2.6%, capping its annual gain to about 112%. Micron Technology rose 4.6% after falling early.
Early in the morning, tech stocks sold around the world. Shares of Taiwan Semiconductor Manufacturing Co., Ltd. and others fell 7.3%, with the Taipei market down 6.5%, the Tokyo market down 4%, and the Shanghai market down 3%.
South Korea’s stock market was closed for the holiday, providing a temporary respite. It is at the center of the AI movement because it is dominated by two giant technology companies: Samsung Electronics and SK Hynix. Last week alone, Seoul’s Kospi stock index rose 6.2% on one day, and fell 6.4% and 8.9% on the other two days.
News of the Chinese open source AI model Kimi K3 by startup Moonshot further shook the market. Another low-cost rival to big Western AI models, such as ChatGPT and OpenAI, could hurt demand for computer chips and other components, as China’s DeepSeek did when it unveiled its AI model in early 2025.
European stock indexes, which are less heavily weighted toward AI and technology, performed calmly.
Adding to the pressure on Wall Street on Friday, several stocks fell following their latest earnings reports. That’s a sharp contrast to the rest of the week, when stocks soared after companies like Goldman Sachs and BlackRock posted spring profits that beat analysts’ expectations.
Netflix fell 6.8% as its latest quarter’s revenue fell slightly below analysts’ expectations, even though its profit beat expectations. Sales and profit forecasts for this summer were also lower than expected.
Intuitive Surgical, a maker of robotic surgical systems, fell 12.6% despite beating expectations in its latest quarter. Analysts cited concerns that the expiration of enhanced tax credits that helped lower health insurance premiums for many Affordable Care Act participants could slow growth in procedures.
Elon Musk’s SpaceX fell 4.1%, hitting its lowest price since its shares began trading on the Nasdaq more than a month ago. The company, which owns the xAI business, was caught up in the volatility in AI stocks, and on Thursday had to abort a test flight of its massive Starship rocket less than a second after launch.
Further increases in oil prices also weighed on the stock market.
The price of international standard Brent crude oil rose 3.9% to $87.48 per barrel from about $76 a week ago.
The United States expanded its air campaign against Iran early Friday, hitting more bridges and toppling towers at Iran’s main ports. This has further heightened concerns about whether oil tankers will be able to use the Strait of Hormuz to transport crude from the Persian Gulf to customers around the world.
Rising oil prices are pushing up yields on U.S. Treasuries in the bond market, threatening to slow the economy and lower the prices of stocks and all other types of investments. Rising yields have already pushed the average interest rate on a 30-year mortgage to its highest level in about a year.
But on Friday, U.S. Treasury yields fell. The yield on the 10-year U.S. Treasury note fell to 4.54% from 4.57% late Thursday.
The report suggested that while future inflation expectations have receded, U.S. consumer sentiment has improved more than economists expected. This is important for the Fed, which is considering raising interest rates to rein in inflation. If inflation expectations remain fixed, this will prevent a vicious cycle in which people act in anticipation of higher inflation, causing further inflation.
Preliminary results from a survey of U.S. consumer sentiment by the University of Michigan hit the highest level since February. But research director Joan Hsu said much of the increase was due to a recent drop in gas pump prices. If gasoline prices rise again due to the recent rise in oil prices, that could put pressure on an improvement.
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