Stock Markets Drop From Records        05/15 15:25

   The U.S. stock market fell from its records Friday and joined a worldwide 
drop for stocks after higher oil prices sent a shiver through the bond market.

   NEW YORK (AP) -- The U.S. stock market fell from its records Friday and 
joined a worldwide drop for stocks after higher oil prices sent a shiver 
through the bond market. Stocks that had been caught up in the euphoria around 
artificial-intelligence technology led the way lower.

   The S&P 500 fell 1.2% from its all-time high set the day before. The Dow 
Jones Industrial Average dropped 537 points, or 1.1%, and the Nasdaq composite 
sank 1.5% from its own record.

   Technology stocks tumbled in a sharp turnaround from their meteoric rises 
for much of the year, which had carried markets worldwide to records but also 
raised criticism that they had gone too far.

   Nvidia, the stock that quickly became the face of the AI revolution, dropped 
4.4% and was the heaviest weight on the S&P 500. It had come into the day with 
a gain of more than 26% for the year so far.

   Micron Technology was another one of the heaviest weights on the market 
after falling 6.6%. It's nevertheless still up nearly 154% for the year so far.

   "To us, it looks like markets have pushed into overbought territory," 
according to Brian Jacobsen, chief economic strategist at Annex Wealth 
Management. He said the strong corporate profits and durable U.S. economy that 
launched U.S. stocks to records remain intact, but "the path is unlikely to be 
smooth. Periods like this call for discipline more than hope."

   In the meantime, rising oil prices are raising the pressure after already 
worsening inflation by more than economists had feared. The war with Iran is 
continuing, and the Strait of Hormuz remains shut to oil tankers, which is 
preventing them from delivering crude to customers worldwide and driving up 
oil's price.

   The price for a barrel of Brent crude oil, the international standard, rose 
3.3% to settle at $109.26 and is well above its level of roughly $70 from 
before the war.

   Many big U.S. companies have been saying their customers have been able to 
keep spending on their products and services despite having to pay higher 
prices for gasoline. But U.S. households have also been telling surveys they're 
feeling discouraged about the economy and the pressures building on them 
because of the war and tariffs.

   The worries were most clear Friday in the bond market, where Treasury yields 
climbed. The yield on the 10-year Treasury rose to 4.59% from 4.47% late 
Thursday. That's a notable move for the bond market, and it's well above its 
3.97% level from before the war.

   The yield on the 30-year Treasury reached 5.13% and is back to where it was 
in 2007, before the financial crisis sent yields crashing toward zero in the 
ensuing year.

   Higher yields can make mortgages and other kinds of loans going to U.S. 
households and businesses more expensive, which slows the economy. They also 
tend to push downward on prices for stocks and all kinds of other investments.

   Stocks of smaller companies had some of Friday's sharpest drops. Many of 
them need to borrow cash to grow, which means higher borrowing costs can hurt 
them more than their big rivals. The Russell 2000 index of the smallest U.S. 
stocks fell 2.4%, double the S&P 500's loss.

   All told, the S&P 500 fell 92.74 points to 7,408.50. The Dow Jones 
Industrial Average dropped 537.29 to 49,526.17, and the Nasdaq composite sank 
410.08 to 26,225.14.

   Yields have been climbing since the war on worries about higher inflation 
and how it may tie the Federal Reserve's hands when it comes to short-term 
interest rates. Not only have traders abandoned virtually all expectations that 
the Fed will resume its cuts to interest rates this year, they've been building 
some bets that it may even hike rates in 2026, according to data from CME Group.

   A couple of reports on the U.S. economy that came in better than expected 
also helped to lift yields. One said U.S. industrial production improved by 
more last month than economists expected, while another said manufacturing in 
New York state is expanding at a faster rate.

   In stock markets abroad, indexes fell by more than 1.5% across much of 
Europe and Asia.

   South Korea's Kospi dropped 6.1% for one of the biggest moves. It's set 
records this year because of the influence of AI beneficiaries like SK Hynix. 
But it quickly reversed momentum Friday after briefly topping the 8,000 level 
for the first time.

   Some on Wall Street have been warning about a possible break in momentum for 
tech stocks in general and AI winners in particular.

   "If nothing else this should be a 'shot across the bow' for how volatility 
works both ways," according to Jonathan Krinsky, chief market technician at 
BTIG.