U.S. equities finished Thursday's session mixed, with the Nasdaq Composite logging the sharpest decline among the major benchmarks as artificial intelligence-linked shares sold off and climbing crude prices revived inflation concerns.
The tech-heavy Nasdaq slid 1.24% to 27,197.10, while the S&P 500 shed 0.46% to 7,765.70. The Dow Jones Industrial Average bucked the trend, adding 0.09% to close at 51,225.48.
AI names retreat after OpenAI revenue report
Semiconductor and technology shares came under pressure following a Financial Times report indicating that OpenAI's annualised revenue was roughly $20 billion short of the level the company had previously guided toward. Oracle dropped more than 5%, while Nvidia and Advanced Micro Devices fell about 2% and 3%, respectively.
The pullback was notable given that chip stocks had rallied more than 80% year to date, leaving them vulnerable to any disappointment on the AI demand narrative. The report also intensified scrutiny of the enormous capital expenditures underpinning the AI buildout. Broadcom and Oracle drew additional attention after reports that Broadcom was arranging $50 billion in financing for OpenAI, while Oracle was seeking fresh funding.
Palantir was a rare gainer in the tech space, rising 2% after Goldman Sachs upgraded the stock to Buy from Neutral, citing growing demand for sovereign AI and tailored applications. Investors are now turning their attention to third-quarter earnings, which kick off next week.
Oil climbs as Middle East tensions persist
Crude prices advanced as supply-disruption worries in the Middle East continued to grip markets. Brent crude settled 3.6% higher, and West Texas Intermediate added 3.19%. Attacks on shipping in the Strait of Hormuz and hurricane-related reductions in U.S. output supported prices.
U.S. crude has climbed more than 60% this year as the conflict involving Iran has tightened global supplies. The energy rally has fed concerns that inflation could stay elevated for longer. President Donald Trump later said the U.S. would not strike Iran before the midterm elections, which helped oil retreat from its session highs.
Treasury yields stay near multi-year highs
Treasury yields remained close to multi-year peaks as investors weighed the inflationary impact of costlier oil against the Federal Reserve's rate path. The benchmark 10-year yield was last down more than 7 basis points at 5.22%, while the 30-year yield fell 13 basis points to 5.60%, following a strong auction of 30-year bonds.
Elevated yields have amplified equity volatility, particularly as market participants assess whether higher energy costs could keep inflation sticky and prompt additional rate increases. Markets currently expect the Fed to hold rates steady this month, while the probability of a December hike is nearly 70%, according to CME's FedWatch tool. Fed Governor Christopher Waller has said further increases will probably be necessary, though the timing remains flexible.
Company news moves individual names
Outside technology, PepsiCo shares gained after the company said it would pursue additional spending cuts while lowering its annual core profit forecast. Starbucks shares edged lower following reports that the coffee chain was exploring a potential acquisition of Chipotle Mexican Grill, whose shares jumped on the report.
This article is for informational purposes only and does not constitute financial advice.
