Financial Markets                      07/31 16:11

   

   NEW YORK (AP) -- U.S. stocks rose Friday to finish a wild July for Wall 
Street as Amazon leaped, Apple sank and rising oil prices worsened worries 
about inflation staying high.

   The S&P 500 climbed 0.7% after veering between gains and losses through the 
day. The Dow Jones Industrial Average added 276 points, or 0.5%, and the Nasdaq 
composite rallied 1% after briefly losing all of an early 1.3% jump.

   It's a fitting finish to July for the U.S. stock market, which lurched up 
and down as oil prices shot higher because of the war with Iran and worries 
grew about whether Big Tech's massive investments in artificial-intelligence 
technology will translate into profits and whether chipmaker stocks soared too 
high in the euphoria around AI.

   Friday's gains sent the S&P 500 to its first winning week in three, but the 
main measure of the U.S. stock market nevertheless finished the month with a 
tiny loss.

   Amazon led the market with a leap of 15.3% after reporting much stronger 
profit for the latest quarter than analysts expected. Its profit more than 
tripled from a year earlier, thanks in part to an acceleration of growth in its 
cloud computing business.

   Analysts said that could be a signal Amazon's huge AI investments are paying 
off, and Amazon increased its forecast for how much it will spend on 
investments this year.

   The reaction was similar to what Microsoft got a day before, when its stock 
soared to its best day in nearly 18 years on signals that its AI investments 
may also be yielding higher profits.

   Chip companies selling the processors and computer memory that such 
"hyperscalers" are scrambling to buy swung sharply again on Friday. Micron 
Technology, for example, went from an early jump of 6.4% to a loss of 6.5% 
before finishing with a fall of 5.9%.

   More firmly on the losing end of Wall Street was Apple, which dropped 7.4% 
despite reporting stronger profit for the latest quarter than expected. Its 
forecast for revenue growth in the current quarter fell short of expectations, 
which executives pinned on a supply crunch in components getting vacuumed up in 
the AI boom.

   All told, the S&P 500 rose 52.09 points to 7,489.72. The Dow Jones 
Industrial Average added 276.97 to 52,485.03, and the Nasdaq composite climbed 
251.68 to 25,373.85.

   The gains came despite another rise in oil prices as uncertainty continues 
about when the war with Iran will allow crude to flow freely again from the 
Middle East.

   The price for a barrel of Brent crude rose 1.2% to settle at $87.93 after 
careening between $72 and $102 earlier in July.

   Higher oil prices have pushed the cost for a gallon of regular gasoline to 
an average of nearly $4.11 across the United States, up from $3.85 a month ago, 
according to AAA. More expensive oil also puts upward pressure on prices for 
virtually every product that rides on a ship, plane or truck before getting to 
a customer.

   The worries about inflation sent yields in the bond market even higher.

   The yield on the 10-year Treasury rose to 4.71% from 4.68% late Thursday and 
from just 3.97% before the war with Iran sent oil prices shooting higher. 
That's a notable move for the yield, which moves higher when investors' 
expectations for inflation, economic growth and other factors in upcoming years 
are rising.

   The leap for the 10-year yield has already sent the average long-term U.S. 
mortgage rate to its highest level in a year.

   Longer-term yields jumped on Wednesday after the Federal Reserve's chairman, 
Kevin Warsh, promised again to get inflation back down to 2% but refused to say 
how he plans to get it there. The Fed voted again to keep its main interest 
rate steady on Wednesday, even though inflation remains well above 2%.

   Hikes to rates by the Fed could restrain inflation, but they could also slow 
the economy and undercut prices for stocks and other investments. President 
Donald Trump, who nominated Warsh to lead the Fed, has lobbied for lower 
interest rates instead of higher.

   Warsh has told financial markets that he does not want to give hints about 
what the Fed will do with interest rates, saying he wants to get direct, 
"unfiltered" messages from them rather than echoes back of what the Fed has 
suggested.

   But "without clarifying why action was or wasn't taken already, it's hard to 
see how statements about being committed to hitting its inflation target aren't 
just a bluff," according to Brian Jacobsen, chief economic strategist at Annex 
Wealth Management.

   "The Fed is facing a growing credibility problem," economists at Bank of 
America wrote in a report. Unless data comes in showing less pressure on 
inflation in the interim, "it is imperative for the Fed to pass the September 
test by hiking rates and delivering an internally consistent narrative."

   In stock markets abroad, the swings were even wilder for chip stocks.

   Seoul's Kospi index soared 17.9% for its best day in history. The index is 
dominated by two tech giants, Samsung Electronics and SK Hynix, and both surged 
at least 26.8% on Friday.

   The Kospi, though, still lost 22% in July despite Friday's historic move. 
That's after it more than doubled in the first six months of the year.

   ___

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

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