Financial Markets                      06/10 15:39

   

   NEW YORK (AP) -- Another sell-off for artificial-intelligence stocks helped 
drag the U.S. market sharply lower Wednesday, as Wall Street's former 
superstars continue to face heavy scrutiny for their success.

   The S&P 500 dropped 1.6% for its first back-to-back drop in three weeks and 
is back to where it was in early May. The Dow Jones Industrial Average tumbled 
953 points, or 1.9%, and the Nasdaq composite led the market lower with a 2% 
slide.

   Wall Street has been shaky since last week, when AI stocks went from roaring 
to records to suddenly turning lower. Among the worries is that their prices 
have simply shot too high, too fast because of AI mania. The question now is 
whether the break lower has cleared out excessive optimism that may have built 
into their stock prices, or if it's the start of a longer downturn.

   Super Micro Computer, which sells AI servers, tumbled 28% after saying late 
Tuesday that it plans to raise $7 billion in cash by selling shares of stock 
and convertible preferred stock. Such moves raise the most money for companies 
when their stock prices are high, and they can dilute the ownership stakes of 
existing shareholders.

   Micron Technology swung from an early loss of nearly 4% to a modest gain and 
back to a loss of 4.7%. It's coming off a wild stretch where it sank 7.7% last 
Thursday, then plunged another 13.3% Friday and rallied 9.9% Monday. Despite 
all the swings, the computer memory maker's stock is still up 212.5% for the 
year so far.

   Nvidia, the chip company that's grown into a nearly $4.9 trillion behemoth 
because of the AI boom, was the heaviest weight on the S&P 500 after falling 
3.7%. The second-heaviest was another AI winner, Broadcom, which fell 5.1%.

   Some of the pressure on AI stocks could also be coming from investors 
pulling cash out to prepare for high-profile debuts on the U.S. stock market 
for several AI giants. SpaceX's initial public offering could come later this 
week, for example.

   Weakening stocks for companies with big fuel bills also pulled the market 
lower. United Airlines sank 6.2%, and cruise-operator Carnival fell 6.3% after 
oil prices rose due to the latest fighting in the war with Iran.

   The price for a barrel of Brent crude oil rose 1.8% to $93.10 after 
President Donald Trump warned Iran would "pay the price" for stalled 
negotiations between the two on their war. The war has been keeping the Strait 
of Hormuz effectively shut to oil tankers, which has prevented the delivery of 
crude from the Persian Gulf to customers worldwide.

   High oil prices have sent inflation higher, and a report on Wednesday showed 
that prices for U.S. consumers jumped in May at the highest speed in three 
years.

   But Treasury yields nonetheless held relatively steady in the bond market 
because the figures were pretty much exactly what economists had forecast. The 
rise in an important underlying measure of inflation, meanwhile, was not as bad 
from April through May as economists expected.

   The yield on the 10-year Treasury edged up to 4.54% from 4.53% late Tuesday. 
The two-year Treasury yield, which more closely tracks expectations for what 
the Federal Reserve will do with its overnight interest rates, held at 4.13%.

   Traders have been building bets recently that the Fed will have to hike its 
main interest rate at least once this year, given how high inflation is and how 
strong the U.S. job market remains. Wednesday's inflation update didn't sway 
them much, according to data from CME Group.

   High yields can slow entire economies and undercut prices for all kinds of 
investments, including stocks and cryptocurrencies. They hit investments seen 
as the most expensive in particular, and some critics are calling AI a bubble 
where investment inflated too far.

   All told, the S&P 500 fell 119.66 points to 7,266.99. The Dow Jones 
Industrial Average dropped 953.33 to 49,918.78, and the Nasdaq composite sank 
509.32 to 25,169.50.

   In stock markets abroad, indexes in Europe were mixed following sharper 
drops in Asia.

   South Korea's Kospi tumbled 4.5%, hurt by losses for tech giants Samsung 
Electronics and SK Hynix.

   Tokyo's Nikkei 225 sank 1.9% after data showed Japan's producer price index, 
a measure for prices at the wholesale level, rose in May at the fastest pace in 
more than three years. Shares of technology and telecommunications giant 
SoftBank Group, which has a strong AI focus, lost 8.3%.

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   AP Business Writers Chan Ho-him and Matt Ott contributed to this report.

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