As of early Thursday afternoon in New York, US stocks continued to decline, with technology shares at the forefront of the downturn. An escalation of conflict in the Middle East drove oil prices sharply higher, with West Texas Intermediate (WTI) crude surging past $90 and Brent crude breaking through the $100 per barrel threshold for the first time. Investors were also digesting quarterly results from two major corporations: Alphabet and Tesla Motors.
The Dow Jones Industrial Average fell by 507.76 points, a drop of 0.97%, to 51,710.82. The Nasdaq Composite slumped 597.40 points, or 2.33%, to 25,093.51. The S&P 500 index shed 96.49 points, losing 1.29%, to close at 7,402.47.
Adding pressure to the equity market, the Tehran-backed Houthi group in Yemen claimed responsibility for an attack on two Saudi Arabian oil tankers in the Red Sea. This incident heightened worries that the regional conflict could widen further.
Oil prices also received a boost after US President Donald Trump threatened to bomb Iranian infrastructure. In a post on his Truth Social platform on Thursday, Trump wrote: "From now on, every time the Islamic Republic of Iran fires at ships in the Strait of Hormuz, whether by missile, rocket, drone, or any other device or weapon, the United States will bomb and destroy a bridge or a power plant, including facilities in or near the capital city of Tehran."
Brent crude futures for July delivery surged 6% to trade above $100 per barrel, while US WTI crude futures jumped 5%, breaking above $91 per barrel. Both benchmarks were trading at their highest levels since the peace agreement between the US and Iran was finalized last month.
"Inflation concerns are once again the primary focus of the market this morning, with Brent crude prices climbing as the situation in the Middle East continues to escalate," wrote Deutsche Bank analyst Jim Reid in a note on Thursday morning.
US Treasury yields rose in tandem with oil prices, with the 10-year note yield reaching its highest level since January 2025. Reid noted, "There is no sign of a de-escalation in the tit-for-tat strikes between the US and Iran. The Houthis claimed they attacked two oil tankers in the Red Sea yesterday, which intensifies fears that the conflict is expanding. This is pushing oil to seven-week highs and also fueling speculation about further interest rate hikes."
The stock market was further weighed down by a 6.5% decline in shares of Alphabet. The parent company of Google raised its 2026 capital expenditure forecast to as high as $205 billion, citing robust demand for artificial intelligence. The announcement comes as investors have become more cautious about the massive spending on AI by hyperscale companies in recent months.
Tesla Motors also tumbled by more than 13% after the electric vehicle manufacturer reported second-quarter earnings that significantly missed analyst expectations. The company's operating expenses also grew at a faster pace than its revenue during the period.
Comments