A broad sell-off on Thursday
U.S. equity markets fell sharply on Thursday as concerns over a possible renewed military conflict with Iran combined with unease about the cost of building artificial intelligence infrastructure, NBC News reported. By 2 p.m. ET, the S&P 500 was down 1.3%, while the technology-heavy Nasdaq had dropped 2.5%.
Oil prices rose. International Brent crude climbed nearly 4%, and U.S. crude gained 2.5%. Investors also moved toward Treasury bonds, a change from the pattern of recent months, as they sought safer assets while riskier holdings such as tech stocks declined. The buying pushed the 10-year Treasury yield below 5% for the first time since late September.
Iran reports rattle investors
The market moves were sparked in part by reporting on Wednesday that Israel and the United States were preparing a military operation in Iran after the November midterm elections. According to The New York Times, likely targets include Iran's energy infrastructure and nuclear sites.
NBC News also reported that U.S. military and diplomatic personnel were being evacuated from several Middle Eastern countries on Wednesday. Iranian officials have promised widespread retaliation for any strikes and have pointed to critical Middle East data center sites and undersea internet cables as possible targets.
AI spending worries weigh on tech
Major technology stocks led the declines. Meta and Tesla both fell after reporting quarterly earnings on Wednesday. Meta's earnings and revenue beat forecasts, but only after excluding billions of dollars in legal penalties it paid last quarter. The company also warned that it expects to raise spending in the coming year to meet demand for computing power. A separate regulatory filing showed Meta intends to spend an additional $825 billion on contracts tied to its AI infrastructure build-out.
Tesla said it was holding back its capital spending plans, which disappointed investors who had hoped for a sign of more aggressive expansion.
The Nasdaq's slide picked up further Thursday morning after Nvidia CEO Jensen Huang said on CNBC that capital to finance the AI investment boom was becoming "scarce," citing higher interest rates and a glut of existing spending commitments.
"It's been another difficult 24 hours for markets, as investors grapple with AI growth concerns, higher oil prices, and ongoing fiscal stress," Henry Allen, director and macro strategist at Deutsche Bank, wrote in a note to clients Thursday.
Context and political stakes
Despite Thursday's losses, the S&P 500 remains near the all-time highs it reached earlier this month. Overseas, a major sell-off in French government debt has also pulled European stocks lower in recent weeks, according to NBC News.
The timing carries political weight. President Donald Trump often cites strong stock market gains as evidence that his economic agenda has made Americans richer. NBC News noted that a significant market stumble before the Nov. 3 elections would undermine a core argument for Trump and the Republican Party, and could further hurt the GOP's midterm prospects.
