Global Markets Fall as Artificial Intelligence Stocks Slide and Middle East War Drives Oil Prices Higher
Global financial markets slumped on Thursday as a sharp sell-off in artificial intelligence stocks combined with soaring energy costs driven by the ongoing war with Iran. The S&P 500 dropped 1.2% to close at 7,663.43, marking its worst single-day performance since July. Meanwhile, the Nasdaq composite tumbled 2.6% to 26,008.86, weighed down heavily by major technology equities.
Technology Sector Sell-Off Drags Down Wall Street and Asia
The tech sector weakness proved so severe that it masked positive momentum across the broader U.S. market, where a majority of individual stocks actually advanced. The Dow Jones Industrial Average managed a fractional gain of 11.89 points, finishing at 52,867.98. AI-related equities have experienced intense volatility amid mounting investor anxiety over the massive capital expenditure required to fund data centers and purchase specialized semiconductor chips.
Meta Platforms shares dropped 7% after the Facebook and Instagram parent reported quarterly revenue that surpassed analyst expectations but missed on net profit. The company also announced plans to issue a new class of stock to fund future artificial intelligence outlays. Electric vehicle maker Tesla lost 3.1% after posting higher-than-expected summer profits alongside weaker-than-forecast revenue.
Nvidia shed 4.4%, exerting the single largest downward pull on the S&P 500 due to its position as the largest company on Wall Street by total market value. CoreWeave, a cloud provider that relies heavily on borrowed capital to purchase Nvidia processors, fell 10.1% amid lingering debt concerns.
The tech-heavy sell-off originated in Asian markets earlier in the session. South Korea’s Kospi index tumbled 3.5%, Hong Kong’s Hang Seng dropped 3%, and Japan’s Nikkei 225 sank 2.7%.
Oil Prices Surge Amid Middle East Conflict
Energy markets added to global economic pressures as crude prices climbed to their highest level in five months. Brent crude futures jumped 4% to reach $113.17 per barrel, up sharply from under $97 at the start of the month, driven by uncertainty over when the war with Iran will permit a normalization of global energy supplies.
European Indices Decline Under Debt Pressures
European equities retreated broadly alongside global peers. France’s CAC 40 index fell 1.4%, suffering one of the region’s sharpest losses. Beyond tech exposure, French markets faced upward pressure on government bond yields driven by mounting debt burdens.
U.S. Treasury Yields Drop as Investors Seek Safe Havens
U.S. Treasury yields tumbled sharply on Thursday as investors rotated out of volatile equities and into government debt. The yield on the benchmark 10-year Treasury note fell to 4.97%, down from 5.13% late Wednesday and more than 5.30% earlier in the month.
The flight to safety occurred despite incoming data showing continued resilience in the U.S. labor market. Initial jobless claims dipped during the previous week, indicating that corporate layoffs remain low and supporting overall economic stability.
Corporate Earnings Provide Regional Resilience
Strong quarterly results from select non-tech corporations helped cushion the broader U.S. market from steeper losses. Procter & Gamble reported summer earnings that beat analyst forecasts, prompting a 5.6% jump in its stock price. CEO Shailesh Jejurikar stated that the company anticipates ongoing geopolitical and economic headwinds while maintaining its full-year financial guidance.
How Did Stock Indices and Oil Prices Move?
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How much did major U.S. stock indices decline on Thursday?
The S&P 500 fell 1.2% (93.74 points) to close at 7,663.43, the Nasdaq composite dropped 2.6% (694.00 points) to finish at 26,008.86, and the Dow Jones Industrial Average edged up 11.89 points to 52,867.98.
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What specific price level did Brent crude oil reach?
Brent crude oil jumped 4% to settle at $113.17 per barrel, touching its highest price point in five months amid disruptions linked to the war with Iran.
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Where did the global equity sell-off begin?
The market weakness initiated in Asia, where South Korea’s Kospi tumbled 3.5%, Hong Kong’s Hang Seng dropped 3%, and Japan’s Nikkei 225 fell 2.7%.
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How did the yield on the 10-year U.S. Treasury note react?
The 10-year Treasury yield dropped to 4.97% from 5.13% late Wednesday as investors purchased government bonds as a safe-haven asset.