By US stocks opened lower on Thursday as renewed concerns over artificial intelligence spending and valuations weighed on technology shares, while rising oil prices added to market uncertainty amid escalating Middle East tensions.
The Dow Jones Industrial Average fell around 112 points, while the S&P 500 declined 0.76%. The Nasdaq Composite dropped 1.38%, making for a weak open for technology stocks.
The pullback followed a strong session on Wednesday, when the Nasdaq led Wall Street higher after earnings from SpaceX and Super Micro Computer revived optimism about AI-related investments.
However, investors reassessed the outlook as concerns over rising infrastructure costs and uncertain returns resurfaced.
Tesla, Meta lead declines in technology stocks
Tesla shares fell more than 2% in trading despite the electric-vehicle maker reporting third-quarter revenue above Wall Street expectations.
The company cut its annual capital expenditure forecast, raising questions about the pace of its AI and robotics ambitions.
Meta Platforms shares declined nearly 6.2% after the social media company introduced new non-voting shares to help finance its expanding AI investments.
The move added to concerns about the scale of spending required to compete in the sector, despite the company exceeding revenue expectations and providing upbeat guidance.
Other major technology stocks also came under pressure.
Amazon and Nvidia fell around 1.7%, while Intel declined more than 4%.
Advanced Micro Devices, Qualcomm, Marvell Technology, Broadcom and Micron Technology recorded losses ranging from approximately 1.7% to 5.1%.
SpaceX shares dropped 3.88% in trading, while Super Micro Computer fell 3.12%.
Investors focused on the high costs associated with AI investments and uncertainty over when those investments would generate returns.
CoreWeave also declined nearly 2.8%, amid continued concerns about its debt and financing conditions.
Nvidia CEO Jensen Huang said demand for neocloud services remained strong, but noted that limited capital was constraining growth.
The renewed pressure pushed the CBOE Volatility Index higher after three consecutive sessions of declines, reflecting increased market uncertainty.
Oil rises as Middle East tensions intensify
Oil prices climbed as concerns about potential supply disruptions intensified following further Houthi attacks in Saudi Arabia and reports of possible renewed US and Israeli strikes against Iran after next month’s US midterm elections.
Brent crude futures rose nearly 3% to above $112 a barrel, approaching a five-month high. West Texas Intermediate crude advanced around 2% to above $99 a barrel.
US President Donald Trump also said Washington was not negotiating with Tehran, adding to uncertainty over the outlook for the conflict.
The increase in oil prices added to investor concerns about the broader economic outlook, while demand for safer assets pushed Treasury yields lower.
The 10-year US Treasury yield fell by more than nine basis points to around 5.05%, while the two-year yield declined by a similar amount to approximately 4.73%.
Earnings outlook and economic data remain in focus
Despite the weakness in stocks, analysts’ expectations for corporate earnings remained strong.
Growth in third-quarter earnings for S&P 500 companies was forecast at 32.3%, up from 30.7% previously, according to LSEG data.
Weekly US jobless claims unexpectedly fell, indicating continued resilience in the labour market.
The data reinforced expectations that the Federal Reserve would leave interest rates unchanged at its meeting next week.
Elsewhere, IBM shares fell 2.9% despite the company raising its annual software revenue forecast and exceeding third-quarter expectations.
Blackstone declined 0.18% after reporting lower quarterly earnings.
Spotify bucked the broader market weakness, rising 8.8% after forecasting fourth-quarter profit above Wall Street estimates, supported by expectations that its AI-powered features would help drive user growth.
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