US Stocks Hammered as Oil Prices Surge Above $100
US stocks took a hit on Thursday as investors grew increasingly concerned about the rising cost of oil and the impact of AI spending on the global economy. The tech-heavy Nasdaq Composite (^IXIC) suffered the worst of the losses, plummeting 2.6% to break below 25,000 for the first time since May.
Big Tech Stocks Take a Hit
The Dow Jones Industrial Average (^DJI) dropped 1.1%, and the S&P 500 (^GSPC) fell by 1.4%, building on a stock retreat on Wednesday amid a flurry of earnings reports. Big Tech stocks led the decline, with Alphabet (GOOG) and Tesla (TSLA) shares taking a hit after the two companies reported results after Wednesday’s market close.
Alphabet posted a strong quarter fundamentally, but the Google parent’s raised capex outlook comes as investors scrutinize AI’s return on investment. Tesla CEO Elon Musk also said 2026 would be a ‘massive capex year’ for the company, highlighting a focus on Optimus robots, robotaxis, and data centers.
Rising Oil Prices and Bond Yields Spur Sell-Off
The latest escalation in the Middle East shows no signs of relenting, and oil prices continued to climb on Thursday. Brent crude (BZ=F) oil futures, the international benchmark, crossed the key $100 level before pulling back. West Texas Intermediate futures (CL=F), the US benchmark, also rose after Iran-backed Houthis said they had attacked tankers in the Red Sea.
Rising oil prices spurred a sell-off in bonds, sending the 10-year (^TNX) to its highest level in a year and a half amid renewed inflation concerns. The latest pressure from oil has pushed back against easing bets that the Federal Reserve would hike interest rates this year.
Initial Jobless Claims Drop to Lowest Level Since 1969
On the economic data front, initial jobless claims unexpectedly dropped to their lowest level since 1969. Claims fell to 187,000 for the week, against expectations of 210,000 first-time claims. The news is a welcome sign for the US economy, which has been grappling with a range of challenges in recent months.
Earnings Reports Await Investors
A raft of earnings reports awaits investors, including from Intel (INTC), T-Mobile US (TMUS), Lockheed Martin (LMT), and others. The reports will provide valuable insights into the financial health of these companies and the broader tech sector.
What’s Next for the Stock Market?
As the stock market continues to navigate the challenges posed by rising oil prices and AI spending, investors will be watching closely for signs of a turnaround. Will the tech sector be able to bounce back from its recent losses, or will the sell-off continue? Only time will tell.
