S&P 500, Nasdaq end sharply lower as revived AI doubts ignite tech selloff
SPY•The S&P 500 fell 1.19% and the Nasdaq dropped 2.58% on Thursday as earnings reports revived concerns about AI spending; the Dow edged up 0.03%. Crude prices touched a five-month high, while investors weighed inflation and the possibility of another Federal Reserve rate increase.
1. Technology shares slide
US stocks tumbled, with the Nasdaq posting its steepest one-day percentage drop since June as chipmakers and other technology shares sold off. The Philadelphia Semiconductor Index fell about one-fourth from its June 22 record close, though it remained sharply higher for the year and ahead of the S&P 500’s year-to-date gain.
2. Earnings and market pressures
Meta Platforms shares fell despite results that beat analyst expectations, after the company reported its first cash outflow in more than a decade due to AI spending and announced plans to issue non-voting shares in a two-for-one split to raise capital. Tesla shares also declined despite positive free cash flow and lower 2026 capital spending plans. Spotify, Procter & Gamble, Lockheed Martin, Blackstone and Union Pacific gained after their earnings reports.
3. Rates and crude prices
Crude prices reached a five-month high after new Houthi strikes against Saudi targets. Investors worried that ongoing Middle East strife could keep inflation hot and lead the Federal Reserve to continue raising interest rates; markets were pricing in the possibility of another 25-basis-point increase before year-end. Labor Department data showed initial unemployment claims remained near multi-decade lows.
