Stock markets around the world fell sharply on Thursday as heavy losses in the artificial intelligence sector outweighed gains across the broader economy, while crude oil surged to a five-month high over the war with Iran. The tech-heavy Nasdaq composite tumbled 2.6% and the S&P 500 dropped 1.2% for its worst day since July. However, the sell-off was heavily concentrated in technology: two out of every three companies in the S&P 500 actually gained ground, and the Dow Jones Industrial Average finished slightly higher.
Investors have grown increasingly nervous that the long-running boom in AI might be slowing down due to the massive cost of borrowing money to build data centers and purchase specialized computer chips. Even encouraging financial reports failed to calm Wall Street. Semiconductor equipment maker Lam Research beat profit expectations yet plunged 11.8%, while Meta Platforms dropped 7% after missing profit targets and revealing a new class of shares to fund AI investments. Chipmaker Nvidia, the most valuable company on Wall Street, fell 4.4%, pulling major indexes down with it.
The tech slump quickly spread across international markets, dragging South Korea’s Kospi down 3.5% and Japan’s Nikkei 225 down 2.7%. At the same time, geopolitical turmoil drove Brent crude oil up 4% to $113.17 a barrel—up from under $97 at the start of October—raising concerns about persistent inflation and higher energy costs for businesses and consumers.
Seeking shelter from volatile equity markets, investors turned toward government bonds, pushing the US 10-year Treasury yield down from 5.13% to 4.97%. Meanwhile, traditional companies like Procter & Gamble and Lockheed Martin posted strong summer profits, suggesting that while enthusiasm for high-priced tech shares is cooling under the weight of heavy debt, the wider economy remains resilient.