U.S. stocks fell sharply Thursday as global oil prices topped $100 a barrel for the first time in two months. Earnings from Alphabet and Tesla rekindled fears that big technology companies are spending far more on artificial intelligence than investors are comfortable with.
The Dow Jones Industrial Average fell 506.93 points, or 0.97%, to 51711.65. The S&P 500 fell 90.66 points, or 1.21%, to 7408.30, while the Nasdaq Composite dropped 553.21 points, or 2.15%, to 25137.69. According to preliminary data, there were 759 advancing issues and 1995 declining issues on the NYSE.
Alphabet fell 6.9% after the Google parent raised its capital-spending forecast for the year to as much as $205 billion. The fall was its largest one-day market-cap loss on record.
Tesla tumbled 14% after reporting negative free cash flow for the first time in two years, as the electric-vehicle maker poured money into its autonomous-vehicle and robotics ambitions, including a chip-manufacturing facility called Terafab being developed in partnership with SpaceX and Intel. The key concern across both companies was the same: free cash flow, the cash left over after expenses and big-ticket investments, turned negative even as revenue at both companies soared, which offers a blunt picture of the cost of the AI buildout.
Brent crude jumped more than 7% to top $100 a barrel after Houthi militants claimed attacks on two Saudi oil tankers attempting to cross the Bab al-Mandeb Strait in the Red Sea, the chokepoint that accounted for roughly 12% of the world's seaborne oil flows before the Iran war. The move came as oil supply faced simultaneous pressure at three chokepoints: Hormuz, Bab al-Mandeb and the Black Sea, where Ukrainian drone strikes have disrupted Russian and Kazakh oil exports.
Yields on U.S. Treasury bonds climbed. The 10-year Treasury rose 0.046 percentage point, hitting 4.703% as the oil surge stoked inflation fears. The dollar rose by 0.3 percentage point according to the ICE US Dollar Index. The euro was last seen at $1.14. Gold fell 2.42% to $4046.60 per troy ounce.
Wheat futures crossed $7 a bushel for the first time in three years, pushed higher by Russian attacks on Ukraine's grain export infrastructure, Middle East disruptions to fertilizer supplies and heatwaves threatening crop yields globally.
Lockheed Martin jumped nearly 11% and RTX rose 7.3% after both defense contractors reported swelling order books. Lockheed's backlog hit a record $230 billion, including a preliminary $35 billion Pentagon contract for THAAD missile interceptors.
Railroad stocks surged after Union Pacific, CSX and Norfolk Southern all reported double-digit revenue growth as more cargo shifted from trucks to trains amid a shortage of commercial drivers. Cleveland-Cliffs surged 16% after forecasting its strongest second-half profits in five years and predicting that steel tariffs would outlast the Trump administration.
American Airlines slid 8.4% after the carrier said it now expects to break even for 2026 at the midpoint of its guidance, with fuel costs overwhelming its efforts to raise fares. American was able to offset roughly half of $2.2 billion in added fuel costs by charging higher fares. T-Mobile fell about 11% after new account growth slowed despite higher profit and revenue. Nestlé fell about 7.3% after reporting below-expected sales growth, hurt in part by price increases on its Starbucks-branded coffee products in the U.S. that curbed demand.
The European Central Bank held interest rates steady but signaled concern that surging oil prices could reignite inflation. ECB President Christine Lagarde said she had no plans to step down before her term ends in October 2027.
Looking ahead, American Express, Verizon and Charter Communications report results on Friday. New home sales data for June and flash PMI readings for July are also due Friday.
Write to Anvee Bhutani at anvee.bhutani@wsj.com
(END) Dow Jones Newswires
July 23, 2026 16:49 ET (20:49 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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