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Stocks fell Friday as oil prices hit a five-month high over fears of escalations in the Middle East and traders remained concerned that tech companies might be overspending on AI.
The Dow Jones Industrial Average fell 702 points, or 1.3%, by about 10:40 a.m. ET, while the S&P 500 tumbled 0.4%.
The Nasdaq traded roughly flat after suffering its worst day since June on Thursday.
Brent crude oil futures jumped 2.7% to $116.24 a barrel – their highest level since early May and on track for a weekly rise of more than 10%.
West Texas Intermediate crude rose 2.9% to $102.40 a barrel. National average gasoline prices hit $4.29 a gallon, according to AAA.
Investors feared renewed fighting in the Middle East following reports the US has drawn up plans for fresh strikes after the midterm elections and ordered non-emergency personnel and their families to leave Saudi Arabia.
President Trump on Thursday accused Iran of lying about attacks on ships traversing the Strait of Hormuz, claiming the nation “is doing everything they can to drive up the price of Oil prior to the US Midterm Election.”
“They are even making up fake hits, mines, and everything else, because more Oil is coming through the Hormuz Strait now than it did even prior to the beginning of the Conflict,” he wrote in a Truth Social post.
Iran’s Islamic Revolution Guards Corp said Thursday that four vessels were struck and caught fire in the Gulf, while another three struck mines in the strait, according to a state-backed news agency.
Iran’s army chief also reportedly said the country’s military is fully prepared for “asymmetric warfare” and has built up its capabilities, after the New York Times reported that US and Israeli officials are considering a “short but intensive” operation in Iran after the elections.
Meanwhile, investors also remained concerned about a persistent tech sell-off after major companies reported huge spending plans, and stubbornly high interest rates.
Shares of CoreWeave – a major AI cloud provider, meaning it rents out computing capacity – fell 0.9% Friday after plummeting more than 10% the previous day.
The so-called “neocloud” has become a bellwether for tech companies spending big now and hoping for AI-related revenues in the future.
Some other chip stocks rebounded slightly by Friday morning, with AMD, Micron and Nvidia rising 1.9%, 3.5% and 0.5%, respectively.
The US 10-year Treasury yield ticked up slightly to 4.994%, while the 30-year yield rose to 5.317% after both long-term yields fell sharply on Thursday.