Key facts
- AI stocks worldwide fell sharply, dragging down major indices.
- Oil prices jumped to a five-month high on geopolitical worries.
- Nvidia's stock drop was the largest single force pulling down the S&P 500.
- US Treasury yields fell as investors sought safer assets.
- Procter & Gamble raised its full-year forecasts despite geopolitical challenges.
Global stock markets experienced sharp declines on Thursday, primarily driven by a significant drop in AI-related stocks. The S&P 500 fell 1.2%, the Nasdaq composite tumbled 2.6%, and the Dow Jones Industrial Average saw a modest gain. This broad weakness in tech stocks, including major players like Nvidia, Meta Platforms, and Tesla, overshadowed positive results from some companies and a general rise in the majority of stocks within the S&P 500.
Concerns over the rising cost of borrowing for data center construction and AI chip purchases, coupled with fears of overvaluation after a prolonged rally, contributed to the sell-off. Lam Research and Meta Platforms reported results that, despite some positive aspects, did not prevent their stocks from falling. Nvidia's significant drop, due to its large market capitalization, had a substantial impact on the overall market.
Simultaneously, oil prices surged by 4% to $113.17 per barrel, reaching a five-month high. This increase was attributed to worries stemming from the conflict with Iran and its potential impact on the global energy industry. In Europe, France's CAC 40 index also declined, partly due to rising yields on French government bonds, reflecting concerns about the country's debt load and budget.
Despite a report indicating fewer unemployment benefit applications in the US, suggesting a resilient economy, investors moved towards safer assets. US Treasury yields fell significantly, with the 10-year yield dropping to 4.97% from 5.13%, signaling a flight to safety amid the equity market turmoil.