U.S. stocks close lower as AI trade faces renewed pressure

NEW YORK, June 26 (Xinhua) -- U.S. stocks ended lower on Friday as concerns mounted over rising costs in the artificial intelligence (AI) sector and potential delays in major AI-related initial public offerings.

The Dow Jones Industrial Average fell by 44.51 points, or 0.09 percent, to 51,876.11. The S&P 500 sank 3.47 points, or 0.05 percent, to 7,354.02. The Nasdaq Composite Index shed 60.99 points, or 0.24 percent, to 25,297.62.

Six of the 11 primary S&P 500 sectors closed higher, led by health and consumer discretionary with gains of 3.16 percent and 1.55 percent, respectively. Industrials and technology were the main laggards, declining 1.53 percent and 1.05 percent, respectively.

Concerns are growing that surging costs for memory and storage components could weigh on device makers, following Apple's recent price increases on MacBooks and iPads. Micron Technology's strong quarterly results highlighted continued tight supply in the sector, adding to the pressure.

OpenAI is considering delaying its mega initial public offering until 2027 further dampened enthusiasm for the AI trade, according to a report from The New York Times. OpenAI also said Friday it is restricting the release of its new model at the request of the U.S. government, the latest in an unprecedented vetting of AI products that could pose cybersecurity risks.

The sector also faced headwinds from rising expectations of a Federal Reserve interest rate hike later this year.

Minneapolis Federal Reserve President Neel Kashkari said Friday he now expects a rate hike by the end of 2026 in comparison with his earlier anticipation of a rate cut for the same period.

The U.S. Department of Commerce reported that the personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, rose 4.1 percent year-on-year in May, up from 3.8 percent in April. On a monthly basis, headline PCE increased 0.4 percent. The core PCE index, excluding food and energy, rose 3.4 percent year-on-year and 0.3 percent month-on-month, marking the highest core reading since October 2023.

Oil prices continued to decline on Friday. West Texas Intermediate crude for August delivery fell 2.69 U.S. dollars, or 3.74 percent, to settle at 69.23 dollars per barrel on the New York Mercantile Exchange. Brent crude for August delivery dropped 3.27 dollars, or 4.34 percent, to settle at 71.99 dollars per barrel on the London ICE Futures Exchange.

On the corporate front, Oracle plummeted 19 percent this week, dropping at least 2.6 percent each of the past five days, marking its worst week on Wall Street in 25 years. Nvidia and Alphabet fell 1.64 percent and 2.19 percent, respectively, while Microsoft rose 5.71 percent to lead advancers. Apple bounced back 3.14 percent after having its worst day in over a year.