On Thursday, the three major U.S. stock indices showed mixed movements. Concerns about the huge capital expenditures and financing risks of artificial intelligence ( AI ) companies once again rose, leading to a widespread sell-off in tech stocks. At the same time, tensions between the United States and Iran escalated, driving up international oil prices significantly, and safe-haven funds flocked to U.S. Treasury bonds.
The Nasdaq fell 2.6%, recording its largest single-day decline since June 23; the S&P 500 index fell 1.2%, marking its largest single-day drop since July 29; the Dow Jones index rose slightly by about 10 points.
Popular tech stocks generally fell, with Meta dropping by 8%. Despite the company's third-quarter revenue exceeding market expectations and it releasing optimistic performance guidance, the substantial AI capital expenditures still raised concerns among investors. AMD fell by more than 8%, Micron Technology dropped by 6%, and NVIDIA fell by 4%. The new type of cloud computing service provider CoreWeave also fell by more than 10%. Previously, the company's bond yield and credit default swap (CDS) prices remained high, reflecting market concerns about its debt risks.
NVIDIA CEO Jensen Huang stated on Thursday that the market demand for new cloud computing service providers is “incredibly strong,” but a shortage of capital supply is restricting industry growth.
A trader at Wells Fargo pointed out in a report that Jensen Huang's remarks regarding capital shortages have caused unease in the market, once again raising concerns among investors about the credit market's risk tolerance. Meanwhile, Meta indicates that AI's business still requires substantial capital investment, putting pressure on its stock price and dragging down the overall market performance.
JPMorgan traders stated that the optimistic sentiment in the market on Wednesday reversed during overnight trading, mainly due to the weakening of Meta's stock price before the opening, as well as the intensifying discussions in the market about the possibility of another military strike against Iran after the U.S. mid-term elections. The bank also noted that after recent adjustments in tech stocks, investors' confidence in the financing prospects of AI remains fragile, and there is a lack of willingness in the market to significantly increase risk exposure again.
Meanwhile, geopolitical risks in the Middle East have further intensified. According to sources familiar with the matter, the United States and Israel plan to launch another military strike against Iran after the U.S. mid-term elections next month. U.S. President Donald Trump told reporters on Wednesday evening that Washington is not currently in negotiations with Tehran and said that "something is going to happen soon."
Affected by this, international oil prices have risen significantly. Brent crude oil futures rose by 4%, closing at $113.17 per barrel; US WTI crude oil futures rose by 2.39%, closing at $99.47 per barrel.
Increasing risk aversion has also driven up the price of U.S. Treasury bonds and down their yields. The yield on 10-year U.S. Treasury bonds fell by more than 18 basis points to 4.965%, reaching the lowest level in nearly a month; the yield on 2-year U.S. Treasury bonds fell by more than 17 basis points to 4.65%.
