CNBC_ US stocks fell during Thursday's trading session, pressured by a decline in mega-cap stocks, led by "Meta" and "Tesla", amid mounting concerns regarding artificial intelligence investments, while oil prices jumped as geopolitical tensions escalated.
The Dow Jones Industrial Average dropped by 0.3%, the S&P 500 index fell by 0.9%, and the Nasdaq Composite index declined by 1.6%.
Tesla shares dropped by more than 2%, while Meta shares fell by 5%. These losses came despite Tesla beating third-quarter earnings expectations, even though automotive revenue fell short of desired levels, whereas Meta posted revenues higher than expectations and provided positive guidance regarding its future performance.
Pressures extended to the broader technology sector amid lingering concerns regarding the scale of artificial intelligence spending. Advanced Micro Devices shares tumbled by more than 5%, while Micron Technology and Nvidia shares fell by 2% and 1%, respectively.
Additionally, shares of CoreWeave, a leading company in AI-specialized cloud computing, fell by about 4%, at a time when its bond yields and credit default swap costs remain high.
This decline came after Jensen Huang, CEO of Nvidia, told CNBC on Thursday that demand for AI-specialized cloud computing services is "significantly exceeding expectations", but added that capital constraints are hindering the growth of these companies.
Wells Fargo traders said in a note that Huang's remarks regarding capital scarcity "are unsettling the markets and reigniting concerns about the credit markets reaching the limits of their risk absorption capacity", also noting that Meta's statements regarding massive AI funding requirements drove its shares lower and weighed on the market overall.
JPMorgan traders pointed out that the positive tone that prevailed in the markets on Wednesday reversed overnight, after Meta shares declined in pre-market trading, coinciding with increased talk about the potential renewal of military risks associated with Iran following the US midterm elections next month.
They added in a note to clients that price movements and the trading desk's comments continue to indicate fragile confidence in AI investment financing, as well as a lack of sufficient conviction among investors to strongly return to their positions in the technology sector following the recent pullback.
In energy markets, oil prices jumped after The New York Times reported, citing sources, that the US and Israel have plans to resume strikes against Iran following the US midterm elections scheduled for next month. Furthermore, US President Donald Trump told reporters late Wednesday that Washington is not negotiating with Tehran and that something will happen "relatively soon".
Futures contracts for Brent crude, the global benchmark for oil prices, rose by 3% to exceed $112.45 per barrel, while US West Texas Intermediate crude futures climbed by 2% to more than $99.95 per barrel.
Meanwhile, investors turned to US Treasury bonds seeking safe havens. The yield on the 10-year Treasury note, the benchmark yield, fell by more than 9 basis points to 5.048%, and the yield on the 2-year note dropped by 9 basis points to 4.733%.
