Growth stocks lost ground on Thursday, pushing the Nasdaq slid more than 2% lower as financial reports from major corporations Meta and Tesla failed to alleviate investors’ worries regarding artificial intelligence. Reuters reported that the market decline marked a sharp reversal from Wednesday’s AI-fueled rally, as rising oil prices added further unease to global trading desks.
At 11:58 a.m. ET, the Dow Jones Industrial Average fell 29.18 points, or 0.06%, to 52,826.91, according to Reuters. A decline of 85.27 points, or 1.10%, brought the S&P 500 down to 7,671.90, while a drop of 551.50 points, or 2.06%, pushed the Nasdaq Composite down to 26,152.90.
Meta Shares Slip on New Non-Voting Class to Fund Expansion
Meta shares dropped 5.2% after the social media giant unveiled a new class of non-voting shares designed to help finance its costly infrastructure expansion. The decline occurred despite the company posting stronger-than-expected quarterly revenue alongside an upbeat fourth-quarter sales forecast. Investor focus quickly pivoted from immediate earnings strength to the massive capital requirements needed for artificial intelligence development and the uncertain timeline for generating returns.
The broader selloff pushed the Philadelphia SE Semiconductor Index down 5.6% to its lowest level since July 29, putting the index on track to shed more than $616 billion in market value. Meanwhile, the Nasdaq-100 was set to erase nearly $1 trillion. “Semiconductors and the Nasdaq have been elevated to a huge degree by investors’ rush to participate in the AI build-out,” said Steve Sosnick, chief market analyst at Interactive Brokers. “Investors are now reassessing the pace of AI spending and the returns that spending can generate.” Other members of the Magnificent Seven group also retreated, with Amazon.com and Nvidia declining more than 3% each.
Tesla Cuts Forecasts as Defense and Streaming Giants Gain
Tesla shares fell 0.7% after the electric-vehicle maker trimmed its annual capital expenditure forecast, raising questions regarding the pace of its robotics and artificial intelligence ambitions. Six of the 11 S&P 500 sectors posted losses, led by technology stocks dropping more than 2.7%. Conversely, consumer staples led sector gains with a 2.5% rise, fueled by Procter & Gamble jumping 6.1% to a near eight-month high after beating first-quarter estimates.
Other segments of the market saw distinct positive momentum. Defense contractor Lockheed Martin climbed 5.9% after raising its annual sales and profit forecast. Swedish audio streaming firm Spotify rose 9% after issuing a fourth-quarter profit forecast above Wall Street expectations, relying on its AI-powered features to drive user growth. Alternative asset manager Blackstone gained nearly 6% following a third-quarter profit beat, with Chief Operating Officer Jon Gray noting that widening credit spreads on artificial intelligence-linked debt could generate opportunities for higher returns.
Oil Prices Rise and Treasury Yields Fall Amid Labor Market Resilience
Outside of equities, Brent crude hovered near a five-month high following renewed Houthi attacks in Saudi Arabia that stoked fears of supply disruptions and a broader Middle East conflict. The geopolitical tension triggered a flight to safety, pushing the 10-year Treasury yield down to around 5.0025%. Concurrently, weekly jobless claims unexpectedly fell, pointing toward a resilient domestic labor market and supporting expectations that the Federal Reserve will leave interest rates unchanged at its upcoming policy meeting next week.
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