(Updates to US market open, changes dateline, byline)
* Trump unhappy with latest Iranian proposal, official
says
* Tech stocks slip on AI spending boom concerns
* UAE sets date for leaving OPEC, OPEC+
By Rodrigo Campos
NEW YORK, April 28 (Reuters) - Stocks fell and oil
prices rose on Tuesday as investors assessed the stalemate in
the Iran conflict and news the United Arab Emirates was cutting
ties with OPEC, while concerns the AI boom was losing momentum
weighed on equity markets.
U.S. bond prices also slid, with yields up on concern over
the effect of high energy prices on inflation.
U.S. President Donald Trump is unhappy with the latest
Iranian proposal on resolving the two-month war, a U.S.
official said, dampening hopes for resolution of a conflict that
has disrupted energy supplies, fuelled inflation, and killed
thousands. The two-month-long conflict is at an impasse and
energy and other supplies are still failing to cross through the
critical Strait of Hormuz.
The UAE said on Tuesday it was quitting OPEC and OPEC+,
dealing a blow to the oil exporting groups and their de facto
leader Saudi Arabia, at a time when the Middle East conflict has
caused a historic energy shock. Oil prices briefly pared gains
on the news, but Brent was last hovering near a three-week high
while WTI broke through $100 per barrel for the first time since
April 13.
"The UAE leaving shows how tough it can be to keep a cartel
together during tough times," said Brian Jacobsen, chief
economic strategist at Annex Wealth Management. "The UAE is
OPEC's third largest producer and the quota it has is well below
its capacity."
He said even if the immediate reaction was muted,
"longer-term it gives OPEC a lot less sway over the markets."
U.S. crude was up 3.57% at $99.76 a barrel and Brent
rose to $111.03 per barrel, up 2.59% on the day.
EARNINGS SEASON AND AI IN FOCUS
The tech-focused Nasdaq Composite fell more than 1% as
investors questioned whether the so-far-unstoppable artificial
intelligence boom can continue to deliver meaningful returns for
investors. The Wall Street Journal reported that AI heavyweight
OpenAI had missed internal targets for weekly users and revenue,
raising concerns over the ChatGPT parent's ability to support
its massive spending on data centers.
"That's putting pressure on the Nasdaq and on the S&P
because tech and communication services make up about 40% of the
benchmark," said Art Hogan, chief market strategist at B. Riley
Wealth.
"If OpenAI is seeing some degradation, that will shuffle the
deck a bit in terms of what the leadership looks like."
The Dow Jones Industrial Average fell 29.19 points,
or 0.06%, to 49,138.60, the S&P 500 fell 50.97 points, or
0.71%, to 7,122.94 and the Nasdaq Composite fell 302.74
points, or 1.22%, to 24,584.36.
Tech stocks related to OpenAI, such as Oracle and
CoreWeave ( CRWV ), fell over 4% each.
MSCI's gauge of stocks across the globe fell
8.04 points, or 0.75%, to 1,066.96.
The pan-European STOXX 600 index fell 0.57%, the
emerging market stocks gauge was down 0.88% at
1,615.58 and MSCI's broadest index of Asia-Pacific shares
outside Japan closed lower by 0.78%. Japan's
Nikkei index fell 1% after hitting a record high on
Monday.
Investors are also focusing this week on earnings from U.S.
tech giants Microsoft ( MSFT ), Alphabet, Amazon ( AMZN )
, Meta Platforms ( META ) and Apple ( AAPL ) that will
further test the AI-driven rally.
Higher oil prices continued to weigh on inflation
expectations. The 2-year Treasury note yield, which
typically moves in step with interest rate expectations for the
Federal Reserve, rose 3.9 basis points to 3.844%, from 3.805%
late on Monday.
The yield on benchmark U.S. 10-year notes rose 3
basis points to 4.366%, from 4.336% late on Monday, while the
30-year bond yield rose 2.2 basis points to 4.9636%
from 4.942%.
Elsewhere, the dollar index - which measures the
greenback against a basket of currencies including the yen and
the euro - climbed 0.4%. The British pound fell 0.5% against the
dollar and the euro dipped 0.35% .
The dollar has been one of the few safe-haven assets during the
Iran conflict, although it has given up many of its March gains
in the last few weeks.
"The twists and turns of U.S.-Iran peace negotiations
continue to buffet markets," Nick Rees, head of macro research
at Monex Europe, said, adding doubts over the progress of peace
talks had pushed the dollar higher.
BANK OF JAPAN SPLIT ON RATES
The BOJ left short-term rates unchanged on Tuesday at 0.75%,
in the first of several central bank meetings this week that
could provide evidence of the conflict's economic impact.
The yen initially strengthened on the view that a
rate hike was now in play, but was last around 0.2% lower at
159.74 per dollar. A breach beyond the 160-per-dollar threshold
has markets on alert that Tokyo might step in to support the
currency.
The U.S. Federal Reserve, the Bank of England and the European
Central Bank are due to announce decisions later this week.
All are expected to keep rates unchanged but market
attention will be on comments from policymakers on pricing
pressure.
(Reporting by Rodrigo Campos in New York; Editing by Emelia
Sithole-Matarise)