Oil prices coast as U.S. intensifies strikes against Iran

An oil facility on Kharg Island, Iran. (Atta Kenare/AFP/Getty Images/Bloomberg)

NEW YORK — Computer chipmakers and other winners of the artificial intelligence boom are slumping again July 16 and weighing on stock markets worldwide. They're drowning out strength for most of the rest of Wall Street, leaving U.S. stock indexes mixed.

Oil prices are near their highest in a month because of worries that the war with Iran will mean oil tankers can't use the Strait of Hormuz to carry crude from the Persian Gulf to customers worldwide.

The price for a barrel of Brent crude briefly climbed above $86 per barrel in the morning but later erased the gain and fell back to $84.34, down 0.7% from the day before.

The S&P 500 fell 0.3%, a day after it pulled within 0.5% of its all-time high set last month. The Dow Jones Industrial Average was down 40 points, or 0.1% as of 1:33 p.m. Eastern time, and the Nasdaq composite was 0.9% lower.

The majority of stocks on Wall Street rose after several of the country's biggest companies reported better profits for the latest quarter than analysts expected.

Abbott jumped 10.5% after the healthcare company delivered a fatter profit than expected and raised its forecast for earnings over the full year. UnitedHealth Group climbed 2.8% after likewise reporting better results than Wall Street expected.

But a 1% move for Nvidia's stock packs more punch on the S&P 500 than a 1% move for any other company because it's the largest on Wall Street by value.

And Nvidia fell 2.5%, making it the heaviest weight on the index. Other AI winners also sank, giving back some of their stellar gains.

CHART OF THE DAY: The cost of refining a barrel of crude oil is at an all-time high due to the twin crisis of the Strait of Hormuz and Ukraine's bombing campaign against Russian refineries. The benchmark WTI 3-2-1 refining indicator is flirting today with the $70 a barrel level. pic.twitter.com/76Kjfz8Gnu — Javier Blas (@JavierBlas) July 16, 2026

Micron Technology fell 6% to shave its gain for the year so far below 200%. Sandisk fell 11% but is nevertheless still up 500% for the year so far. Western Digital sank 10.9% but is still up 166% for the year so far.

Such stocks have been under pressure for weeks because of worries that their prices shot too high and that voracious demand for computer memory and processors may not be sustainable if AI ends up not producing as much profit and productivity as promised.

The losses came even though Taiwan Semiconductor Manufacturing Co., a bellwether of the chip industry, reported a stronger profit for the latest quarter than analysts expected. Its stock in Taiwan rose 1.2%, but its stock that trades in the United States fell 3.1%.

In South Korea, drops for AI winners like Samsung Electronics and SK Hynix dragged the Kospi index down 6.4%. It’s been among the world’s shakiest markets in recent weeks because of how dominant the two AI winners are in it.

The day before, the Kospi jumped 6.2%, but it’s had drops of 8.9%, 7.8% and 5.3% in the last two weeks.

A hike to interest rates by the Bank of Korea also weighed on stocks in Seoul, the first by the bank since 2023.

Higher interest rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments. And worries are rising that the Federal Reserve and other central banks around the world may have to raise rates to rein in the effects of expensive oil.

In the bond market, the 10-year Treasury yield climbed to 4.57% from 4.55% late July 15 and just 3.97% before the war with Iran began.

Reports on the U.S. economy came in mixed, which added to the eddies swirling through the bond market. One report said shoppers spent less at U.S. retailers last month than economists expected. But after ignoring sales at gasoline stations, spending by U.S. consumers remained resilient.

A separate report said fewer U.S. workers applied for unemployment benefits last week, an indication of a solid job market, while a third report said manufacturing in the mid-Atlantic region is better than economists expected.

In stock markets abroad, indexes fell across much of Europe and Asia, including drops of 1.8% in Shanghai and 2.8% in Tokyo.

Hong Kong’s Hang Seng was an outlier and rose 1.3%. Alibaba rose after China’s cyberspace regulator said July 15 it had approved the Apple Intelligence AI tool for use in China. An Alibaba spokesperson said its Qwen model will be integrated into Apple Intelligence.

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