Financial Markets                      07/08 15:20

   

   NEW YORK (AP) -- Oil prices rose, and stock markets dropped in shaky trading 
worldwide after President Donald Trump raised doubts about the temporary truce 
in the war with Iran. The S&P 500 fell 0.3% Wednesday after sinking as much as 
1.1% earlier in the day. The Dow Jones Industrial Average dropped 1.1% after 
Trump said the agreement to pause fighting was over. The Nasdaq composite 
erased an early slump and rose 0.2% after Trump said in the afternoon that the 
most recent fighting did not mean a return to full-scale war. Brent crude oil's 
price climbed 5% above $78 per barrel.

   THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

   NEW YORK (AP) -- Oil prices rose, and stock markets dropped in shaky trading 
worldwide Wednesday after President Donald Trump raised doubts about the 
temporary truce in the war with Iran.

   The S&P 500 fell as much as 1.1% after Trump said the agreement to pause 
fighting was "over," but the index then trimmed its loss to 0.3% after Trump 
said the most recent exchange of fire with the Islamic Republic did not herald 
a return to full-scale war. They're his latest mixed messages on what will 
happen with the war, which threatens to worsen inflation for the world.

   The Dow Jones Industrial Average was down 550 points, or 1%, with an hour 
remaining in trading, and the Nasdaq composite was 0.1% higher after erasing an 
earlier loss.

   The action was stronger in the oil market, where the price for a barrel of 
Brent crude climbed 5.2% to $78.02 and briefly topped $80. That's still below 
its peak from earlier in the war, when the price for the most actively traded 
contract reached nearly $120. But the jump is unsettling because oil prices had 
just dropped back to where they were before the war.

   The worry is that a continuation of the war will block the Strait of Hormuz 
and prevent the delivery of crude from the Persian Gulf to customers worldwide. 
That could worsen inflation, which economists expected would ease with oil 
prices, and in turn force the Federal Reserve and other central banks to raise 
interest rates.

   Higher rates can keep a lid on inflation, but they also slow the economy and 
hurt prices for all kinds of investments.

   Losses for stock markets in Europe accelerated, and oil prices climbed 
immediately after Trump said, "For me, I think it's over" about the status of 
the ceasefire. He added that U.S. representatives can continue negotiations, 
"but I think they're wasting their time."

   On Wall Street, stocks of companies in the housing industry helped lead the 
way lower. They were hurt by worries that rising Treasury yields in the bond 
market will mean higher rates for mortgages and chill the industry.

   Builders FirstSource, which sells countertops, windows and other building 
supplies, fell 4.9%. Homebuilders PulteGroup fell 4.9%, and D.R. Horton sank 
4.3%.

   Companies with big fuel bills also sank. American Airlines lost 3.6%, and 
United Airlines fell 2.2%.

   Helping to offset those losses was a steadying for some influential stocks 
in the artificial-intelligence industry. They've been under pressure in recent 
weeks on worries that their prices shot too high and that AI may not produce 
enough productivity and profits to make all the investments in chips and data 
centers worth it.

   Their swings carry a lot of weight on Wall Street because AI stocks have 
grown into some of the U.S. market's biggest, giving their movements more 
effect on the S&P 500 than other stocks.

   Nvidia rose 3.8%, for example, and was the strongest force pushing upward on 
the S&P 500 because it's the largest stock on Wall Street.

   Broadcom climbed 5.2% after Apple announced a multiyear commitment where 
Broadcom will design and produce custom components for its products. Apple said 
the agreement's value could top $30 billion.

   In the bond market, Treasury yields rose with the price of oil. The yield on 
the 10-year Treasury briefly got near 4.60% before pulling back to to 4.56%. 
That's up from 4.55% late Tuesday and from just 3.97% before the war with Iran 
began.

   In stock markets abroad, European markets turned sharply lower after Trump 
made his comments, and Germany's DAX lost 2.2%.

   In Asia, South Korea's Kospi dropped 5.3% and continued its sharp swings 
amid seesawing worries and euphoria about the AI stocks that dominate its 
market.

   Hong Kong's Hang Seng index was an outlier and rose 3%.

   Shares that trade in Hong Kong of Chinese AI startup Zhipu, known also as 
Z.ai and traded as Knowledge Atlas Technology, jumped 13.4%.

   A six-month lock-up period for "cornerstone" investors following its January 
trading debut in Hong Kong expires this week. China National Radio reported 
late Tuesday that nearly 70% of Zhipu's cornerstone investors are committed to 
stay on, despite previous worries that the lock-up period expiration could 
trigger a sell-off.

   Zhipu's share price has risen more than 1,300% since its debut.

   ___

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

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