AI Jitters and Surging Oil Prices Hammer US Stocks

US stocks fell Thursday as renewed worries about artificial-intelligence spending hit the tech sector. Meta and Tesla both reported stronger bottom-line results, but investors focused instead on questions around profitability, capital spending, and whether the AI investment boom can keep supporting stock gains. The reaction underscored a tougher market mood: strong earnings may not be enough when investors want clearer proof that AI spending will pay off.

Tesla shares fell as much as 3% after investors reacted to lower profitability, while Meta dropped as much as 7% despite upbeat earnings and strong guidance. Tesla cut its annual capex estimate to $20 billion from $25 billion, while Meta’s capex estimate was largely unchanged. The iShares Semiconductor ETF dropped as much as 6%, and the Nasdaq 100 fell as much as 3%, showing how quickly AI-adjacent names came under pressure.

Geopolitical tensions added to the selling as Brent crude rose more than 3% to $113 a barrel. Markets were digesting a New York Times report that said the US and Israel were planning strikes on Iran after the midterm elections. Higher oil prices can complicate the market backdrop by raising concerns about inflation, costs, and broader risk appetite.

The major US indexes were lower shortly after 2:00 p.m. ET: the S&P 500 was down 1.43%, the Dow Jones Industrial Average was down 0.20%, and the Nasdaq 100 was down 2.20%. JPMorgan strategists said the bullish tone had seemingly “reversed overnight,” pointing to a “flight-to-quality trade.” The 10-year US Treasury yield fell 11 basis points to its lowest level in about a month, suggesting investors were moving back into safe-haven government debt.