Sinking AI stocks and rising oil prices weigh on Wall Street

NEW YORK (AP) — Weakening AI stocks and another climb in oil prices because of the Iran war are helping to halt Wall Street’s record-setting rally on Tuesday.

The S&P 500 slipped 0.4% from its latest all-time high. The Dow Jones Industrial Average, which has less of an emphasis on technology stocks, held up better and was up 32 points, or 0.1%, as of 10:05 a.m. Eastern time, while the Nasdaq composite fell 0.7% from its own record.

Stocks enmeshed in the artificial-intelligence industry led the way lower. Nvidia, whose chips are powering much of the AI revolution, sank 1.7% and was the heaviest weight on the S&P 500. Oracle fell 2.6%, and Broadcom dropped 3.2%.

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 2.3% to $110.72. Brent to be delivered in July, which is where traders are focusing more in the oil market, rose 2.3% to $104.00.

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 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 of for a gallon of gasoline in the United States reached $4.18 on Tuesday, the most since 2022, according to the auto club AAA.

On Wall Street, Coca-Cola helped limit the market’s losses 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. Its stock rallied 5.5%.

Oil companies were also strong thanks to the rise in crude prices. Exxon Mobil gained 1.2%, and Chevron rose 1.7%. In London, BP’s stock added 0.5% after the British petroleum giant said its first-quarter profit more than doubled.

In the bond market, Treasury yields ticked higher 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 edged up to 4.36% from 4.35% late Monday.

The Federal Reserve is scheduled to meet Wednesday and 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 prices are rising and tariffs are threatening to push prices higher.

Also Wednesday, the Senate Banking Committee will vote on whether to confirm 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 mostly fell in 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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AP Business Writers Yuri Kageyama and Matt Ott contributed to this report.

Stan Choe, The Associated Press