WASHINGTON — The Nasdaq slid 2.6% as concerns mounted over surging spending by artificial intelligence companies and international oil prices jumped.
On the 22nd, the Dow Jones Industrial Average closed at 52,867.98, up 11.89 points, or 0.02%. The Standard & Poor's 500 index fell 93.74 points, or 1.21%, to 7,663.43, while the tech-heavy Nasdaq dropped 694.00 points, or 2.60%, to 26,008.86. It was the Nasdaq's steepest decline since June.
Meta drove the selloff. The company said it had signed lease agreements and other non-cancelable commitments totaling $825 billion for its AI business, exceeding the $700 billion figure disclosed in July. Meta's third-quarter free cash flow also swung to a deficit of $2.1 billion from a surplus of $10.6 billion a year earlier, and its shares plunged 6.98%. Technology stocks fell broadly as doubts persisted over whether the astronomical AI outlays would translate into actual profits. AMD lost 8.1%, Micron 6.3% and Nvidia 4.4%. SK hynix's American depositary receipts fell 8.1%, CoreWeave dropped 10.1% and the Philadelphia Semiconductor Index slid 6.7%.
A surge in oil prices on renewed Middle East tensions also weighed on equities. Brent crude futures on the ICE Futures Europe exchange in London settled at $113.17 a barrel, up $4.35, or 4.00%, the highest level since May. West Texas Intermediate for December delivery on the New York Mercantile Exchange closed at $99.47 a barrel, up $2.32, or 2.39%.
The gains followed an intensification of attacks on Saudi Arabia by Yemen's Houthi rebels. The group claimed it had carried out a precision strike on the Defense Ministry headquarters in the Saudi capital of Riyadh and had hit King Fahd International Airport in the eastern city of Dammam, paralyzing air traffic.
Expectations that the United States and others would resume attacks on Iran after the U.S. midterm elections added further fuel to oil prices. The New York Times reported a day earlier that U.S. and Israeli military authorities had drawn up plans for strikes targeting Iran's nuclear facilities, missiles, drone capabilities and energy infrastructure. U.S. President Donald Trump told reporters the previous day that Washington was not negotiating with Iran and that something would happen soon.
As markets wobbled, prices of U.S. Treasurys, a safe-haven asset, jumped and yields fell sharply. The 10-year Treasury yield dropped more than 18 basis points to 4.965%, a roughly one-month low, while the two-year yield slid more than 17 basis points to trade around 4.65%. One basis point equals 0.01 percentage point.
JPMorgan wrote in a memo to clients that sentiment around AI funding remained unstable. James McCann of Edward Jones said markets were demanding more evidence of returns on AI investment and were voicing concerns about the sustainability of AI spending amid high interest rates. He said the firm maintains a positive outlook on large-cap stocks but added that investors should work to diversify their portfolios.