Financial Markets                      06/10 09:33

   

   NEW YORK (AP) -- Technology stocks are continuing to fall on Wednesday, and 
the S&P 500 index is on track for its first back-to-back drop in three weeks.

   The main measure of Wall Street's health slipped 0.6%. The Dow Jones 
Industrial Average was down 314 points, or 0.6%, as of 9:35 a.m. Eastern time, 
and the Nasdaq composite was 0.8% lower.

   More drops for stocks swept up in the artificial-intelligence boom dragged 
indexes lower. After roaring to records and pulling the market up with them, AI 
stocks took a sudden turn lower last week. Among the worries is that their 
prices have simply shot too high, too fast.

   Super Micro Computer, which sells AI servers, tumbled 13.5% after saying 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 fell 2.8%, chipping more away from its tremendous gain for 
the year so far. A week ago, the computer memory maker's stock was up nearly 
280%. Now, its year-to-date gain is down to 218.2%.

   U.S. tech stocks had appeared to be heading for even sharper losses early 
Wednesday, based on futures contracts, but an update on U.S. inflation that 
arrived an hour before trading began helped pare the losses.

   The report said inflation accelerated to its highest level in three years, 
but that was exactly what economists had forecast. An important underlying 
measure of inflation, meanwhile, slowed by slightly more in May from April than 
economists expected.

   That helped Treasury yields ease a bit in the bond market, which in turn 
relaxed some of the pressure that's built up on the stock market.

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

   The yield on the 10-year Treasury edged down to 4.52% from 4.53% just before 
the inflation report's release. The two-year Treasury yield, which more closely 
tracks expectations for what the Federal Reserve will do with its overnight 
interest rates, eased to 4.11% from 4.13% just before the report.

   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 caused them to 
trim their bets, but only by a smidgen, according to data from CME Group.

   Keeping things uncertain are continued swings for crude oil prices, which 
have been rising and falling with hopes that the United States and Iran can 
reach a deal to reopen the Strait of Hormuz to oil tankers.

   The price for a barrel of Brent crude oil rose 1.1% to $92.43 after 
President Donald Trump warned Iran would "pay the price" for stalled 
negotiations between the two on their war.

   In stock markets abroad, indexes in Europe pared their losses following the 
update on U.S. inflation. In Asia, the losses were sharper.

   South Korea's Kospi dropped 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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