U.S. stocks opened lower on Thursday, dragged down by mega-cap names such as Meta and Tesla, as worries over the AI trade intensified. At the same time, geopolitical tensions pushed oil prices higher.
As of press time, the Dow Jones Industrial Average had fallen 218 points, or 0.4%; the S&P 500 was down 0.9%; and the Nasdaq Composite had dropped 1.5%. Tesla Motors (TSLA) shares fell more than 2%, while Meta slid 5%. Although Tesla's third-quarter results beat expectations, its automotive business revenue was weak; Meta beat revenue estimates and offered an upbeat outlook, yet both stocks still closed lower.
Shares of neocloud leader CoreWeave fell nearly 4%, with its bond yields and credit default swap prices remaining elevated. Nvidia CEO Jensen Huang said in an interview on Thursday that demand from neocloud providers is "incredibly high," but he added that tight capital supply is constraining the industry's expansion.
Wells Fargo traders wrote in a research note that Huang's remarks on capital scarcity "spooked the market and reignited credit-side concerns — under the current risk appetite, capital markets are already under pressure." Traders also noted that Meta's statement that AI requires massive capital investment weighed on its shares and dampened overall market sentiment.
JPMorgan traders pointed out that Wednesday's optimistic mood reversed overnight, partly due to Meta's premarket weakness and partly due to market rumors that the risk of a military conflict with Iran could resurface after the U.S. midterm elections. The bank's note to clients also said: price action and trading desk feedback show that the market's concerns about AI financing remain fragile, and after this round of tech stock rebound, there is not enough strong bullish consensus or incremental capital follow-through.
On the oil front, sources said the U.S. and Israel plan to resume strikes on Iran after next month's U.S. midterm elections, sending oil prices sharply higher. Trump told reporters on Wednesday evening that the U.S. has not been negotiating with Tehran and that action will come soon. International benchmark Brent crude futures rose nearly 3%, topping $111 a barrel; WTI crude rose 2%, above $99 a barrel.
Money flowed into Treasuries for safety, with the 10-year yield falling more than 9 basis points to 5.048%; the 2-year yield also dropped 9 basis points to 4.733%. U.S. stocks had risen the previous trading day, with the S&P 500 just posting a three-day winning streak.
Comments