The sell-off for AI stars worsens, while oil prices keep jumping
[July 18, 2026] By
STAN CHOE
NEW YORK (AP) — The sell-off for winners of the artificial-intelligence
boom deepened Friday and yanked stock markets lower worldwide. Oil
prices, meanwhile, continued to jump because of the war with Iran.
The S&P 500 fell 1% to finish its first losing week in the last three
and only its third since the end of March. Just a couple days earlier,
it had climbed within 0.5% of its all-time high.
The Dow Jones Industrial Average dropped 406 points, or 0.8%, and the
Nasdaq composite sank 1.4%.
Chip stocks and other AI darlings once again were at the center of the
shaky trading. They’ve been under pressure for weeks on worries that
their prices shot too high and that voracious demand for computer memory
and processors may be unsustainable if AI ends up producing less profit
and productivity than promised.
Nvidia was the heaviest weight on the S&P 500 after dropping 2.2%. Its
recent losses forced it to briefly cede the No. 1 ranking as the most
valuable company on Wall Street Friday, but it finished the day back
above Apple.
Applied Materials sank 5.6% to trim its surge for the year to 106%.
Micron Technology swung between a loss of 5.8% and a gain of 3.2% before
slipping 0.5%.
Earlier in the morning, tech sold off worldwide. Indexes tumbled 6.5% in
Taipei, 4% in Tokyo and 3% in Shanghai as stocks like Taiwan
Semiconductor Manufacturing Co. dropped 7.3%.
South Korea’s stock market was closed for a holiday, offering some
respite, if only temporary. It’s been at the center of the AI swings
because it’s dominated by two huge tech companies, Samsung Electronics
and SK Hynix. This past week alone, Seoul’s Kospi stock index had one
day where it surged 6.2% and two others where it sank 6.4% and 8.9%.
News of a powerful Chinese AI model by startup Moonshot, Kimi K3,
further shook markets. Similar to when China’s DeepSeek announced its AI
model in early 2025, another low-cost rival to big Western AI models
like ChatGPT and OpenAI could potentially hurt demand for computer chips
and other components.
European stock indexes, which have less of an emphasis on AI and tech,
had milder moves.
Adding to the pressure on Wall Street were drops for several stocks
following their latest earnings reports. Companies are under pressure to
deliver big growth for the spring to justify the big moves upward their
stock prices have already made.
Netflix sank 7.3% after its revenue for the latest quarter fell just
short of analysts’ expectations, even though its profit was bigger than
expected. Its forecasts for upcoming revenue and profit in the summer
also fell below expectations.
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 Intuitive Surgical, a maker of
robotic surgical systems, dropped 14.1% despite topping expectations
for the latest quarter. Analysts pointed to worries about slowing
procedure growth because of the expiration of enhanced tax credits
that helped lower the cost of health insurance for many Affordable
Care Act enrollees.
Elon Musk’s SpaceX fell 5.4% and touched its lowest level since its
stock began trading on the Nasdaq just over a month ago. The owner
of the xAI business has been swept up in the swings for AI stocks,
and it also had to abort a test flight of its mega Starship rocket
Thursday within a second or so from blasting off.
All told, the S&P 500 fell 76.08 points to 7,457.69. The Dow Jones
Industrial Average dropped 406.55 to 52,146.42, and the Nasdaq
composite sank 361.70 to 25,520.24.
More climbs for oil prices also pressured the stock market.
The price for a barrel of Brent crude, the international standard,
jumped 4.6% to settle at $88.10, up from roughly $76 a week ago.
The United States expanded its airstrike campaign against Iran early
Friday by hitting more bridges and collapsing a tower at a key
Iranian port. That raised further worries about whether oil tankers
will be able to use the Strait of Hormuz to carry crude from the
Persian Gulf to customers worldwide.
High oil prices have sent Treasury yields upward in the bond market,
which threaten to slow the economy and undercut prices for stocks
and all kinds of other investments. Higher yields have already sent
the average 30-year mortgage rate to its highest level in nearly a
year.
But longer-term Treasury yields eased Friday. The yield on the
10-year Treasury fell to 4.55% from 4.57% late Thursday.
A report suggested sentiment among U.S. consumers is improving more
than economists expected, while expectations for upcoming inflation
eased. That’s important for the Federal Reserve, which is
considering hikes to interest rates to keep a lid on inflation.
If expectations for inflation remain anchored, it could prevent a
vicious cycle where people make moves in anticipation of higher
inflation, which only worsen it.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed to
this report.
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