The S&P 500 fell 1.2%, its worst day since July, while the Nasdaq composite tumbled 2.6%. The Dow Jones Industrial Average added 11 points, or less than 0.1%. The decline was so concentrated in tech that two out of every three stocks in the S&P 500 actually rose.
AI-related stocks have been swinging on worries that their boom may be under threat because of how expensive it has become to borrow money to build datacenters and buy AI chips. Concerns also remain that prices shot too high after a years-long frenzy, even though companies in the industry continue to report growth.
Lam Research, whose equipment and services help make semiconductors, reported summer profit and revenue slightly stronger than analysts expected, yet its shares tumbled 11.8%. Meta Platforms lost 7% after reporting stronger revenue than expected but a profit that fell short; the company behind Facebook and Instagram also said it was creating a new class of stock to raise money for AI investments and other expenses. Tesla fell 3.1% after reporting stronger profit but weaker revenue than forecast. Nvidia fell 4.4%, and because it is the largest company on Wall Street by total value, its move was the single strongest force pulling the S&P 500 lower. CoreWeave, which has borrowed money to buy Nvidia's AI chips and rents them out over the cloud, dropped 10.1% after recent weeks of shakiness over worries about its debt.
The weakness began in Asia, where indexes are full of industry players. South Korea's Kospi tumbled 3.5%, Hong Kong's Hang Seng dropped 3% and Japan's Nikkei 225 sank 2.7%. In Europe, France's CAC 40 fell 1.4%, one of the continent's sharpest losses, hurt by another jump in yields on French government bonds over worries about the government's debt load and strained budget. Violent protests across France have raised pressure for more spending, which could add to that debt.
Oil added to the pressure. Brent crude leaped 4% to $113.17 a barrel after touching its highest level in five months, up from less than $97 at the start of the month, as uncertainty continues over when the war with Iran will allow the global energy industry to return to normal.
US bond yields, which had recently climbed to multi-decade highs, fell sharply on Thursday as investors bought government bonds in search of safety. The yield on the 10-year Treasury dropped to 4.97% from 5.13% late Wednesday. The move came even as a report showed fewer US workers applied for unemployment benefits last week, a signal that layoffs remain low.
Strong profit reports from companies outside tech helped limit the damage. Procter & Gamble, Lockheed Martin and CSX were among those topping expectations, and P&G rose 5.6%. CEO Shailesh Jejurikar said the company expected "geopolitical and economic challenges" to continue but stood by its full-year forecasts for growth in revenue, profit and other measures.
All told, the S&P 500 fell 93.74 points to 7,663.43, the Dow added 11.89 to 52,867.98 and the Nasdaq tumbled 694.00 to 26,008.86.