Stocks fell on Thursday due to mounting concerns regarding spending by artificial intelligence companies, coupled with a significant rise in oil prices stemming from geopolitical tensions. The Nasdaq Composite dropped 2.1%, while the S&P 500 decreased by 1.3%. The Dow Jones Industrial Average fell by 279 points, or 0.5%.
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Meta Platforms' shares decreased by 5% despite the company surpassing revenue expectations and providing positive guidance. Broader technology stocks faced pressure as lingering concerns about AI spending persisted. Advanced Micro Devices and Micron Technology saw declines of over 5% and 2%, respectively, while Nvidia's shares fell by 1%. CoreWeave, a leader in neocloud services, experienced a nearly 4% drop, reflecting pressures on its bond yields and credit default swaps. NVIDIA CEO Jensen Huang remarked to CNBC that demand for neocloud services is extremely high but identified a scarcity of capital as a hurdle for growth.
Wells Fargo noted that Huang's comments on capital scarcity have unsettled the markets and reignited fears about the credit side of capital markets. Analysts from JPMorgan reported a shift in market sentiment, citing a reversal in enthusiasm as Meta's premarket performance declined and increasing chatter concerning the potential for renewed geopolitical risks in Iran following the upcoming U.S. midterm elections.
This was further underscored by rising oil prices, with Brent crude futures increasing by 3% to over $112.45 per barrel and West Texas Intermediate crude futures rising by 2% to over $99.95 per barrel following reports from The New York Times about planned strikes against Iran by the U.S. and Israel.
In search of safer investments, investors turned to U.S. Treasurys, causing the yield on the benchmark 10-year Treasury note to drop over 9 basis points to 5.048%. The 2-year note yield fell by 9 basis points, trading at 4.733%.
Additionally, CME Group shares advanced 3% following an upgrade from JPMorgan, which re-rated the stock to overweight and increased its price target. Lockheed Martin shares surged over 3% after reporting stronger-than-expected results, largely fueled by high demand for its defense products. Meanwhile, American Airlines shares fell nearly 4% following a disappointing earnings forecast amid rising fuel costs.
In Asian markets, stocks were mixed, with the MSCI All Country Asia Pacific ex-Japan Index declining by over 2%, while Japan's Nikkei 225 dropped 2.6%. China's CSI 300 index entered bear territory as it faced ongoing selling pressure, falling significantly from its peak earlier this year.