Oil Prices Break $100 Combined with Tech Selloff, U.S. Stocks Plunge Across the Board on Thursday
Alina Collins
Brent crude broke $100 a barrel, Alphabet and Tesla earnings exposed AI capex devouring free cash flow, and all three US indexes fell Thursday — the Nasdaq dropped 2.15%. Two pressure lines are tightening at once: surging oil prices and ballooning tech spending are forcing the market to reprice stagflation risk and the AI payback timeline.
How much did the three indexes fall?
The Dow shed 506.93 points (0.97%) to 51,711.65. The S&P 500 lost 90.66 points (1.21%) to 7,408.30.
The Nasdaq dropped 553.21 points (2.15%), leading the decline — tech-heavy, it took the worst hit.
On the NYSE, 1,995 stocks fell versus just 759 gainers. This means → the selloff was not confined to tech; the entire market was under pressure.
What exactly went wrong in Alphabet's and Tesla's earnings?
Alphabet (Google's parent) fell 6.9%, its largest single-day market-cap loss ever. The company raised its full-year capex guidance from $180 billion to $195–205 billion and reported negative free cash flow — the cash actually left after spending — in Q2.
Tesla dropped roughly 14.5%, also posting negative free cash flow for the first time in nearly two years. Cash poured into autonomous driving, robotics, and "Terafab," a chip-fabrication facility being built with SpaceX and Intel. Q2 profit also missed estimates.
In plain terms = both companies are growing revenue fast, but spending on AI infrastructure even faster — cash going out exceeds cash coming in. The market is now asking: when does this spending actually pay off? The selloff dragged the broader "Magnificent Seven" down by hundreds of billions in combined market cap.
Why did oil suddenly break $100?
Brent crude topped $100 a barrel intraday for the first time in two months. WTI jumped about 5.45% to $91.56.
The trigger: escalating Middle East tensions. The US-Iran conflict has nearly halted shipping through the Strait of Hormuz, and Houthi forces again struck a Saudi tanker in the Bab el-Mandeb strait — a chokepoint that previously carried roughly 12% of the world's seaborne oil.
This means → the two most critical oil-shipping bottlenecks are threatened simultaneously, and supply-side panic is pushing prices higher.
How have bonds and rate-hike expectations shifted?
The 10-year Treasury yield climbed to 4.70%, its highest since January last year. The 30-year yield held firmly above 5%.
Per the CME FedWatch tool, the probability of a 25-basis-point hike at next week's Fed meeting rose to nearly 38%; the September hike probability topped 80% — up from roughly 12% and 53% just a week ago.
This reflects a sharp repricing of inflation expectations: oil pushes up consumer prices, bond yields follow, and rate-hike bets doubled in a single week.
These issues have gotten too big to ignore. $100 oil can't be ignored, a 10-year yield above 4.70% can't be ignored, and a 30-year yield firmly above 5% can't be ignored.
Steve Sosnick
Chief Strategist, Interactive Brokers
(Thursday market commentary)
What is the core bull-bear divide?
Is this pullback a buying opportunity — or the start of a deeper downturn?
BULL
Diplomatic off-ramp exists
JPMorgan argues the US-Iran conflict has exit paths — buy the geopolitical dip.
Markets have absorbed shocks before
The prior bull case rested on the expectation that the administration would seek de-escalation.
BEAR
Stagflation pressure is materializing
Wells Fargo's Samana warns oil-driven inflation is hitting consumers — prepare for a larger correction.
AI payback timeline is getting murkier
Tech giants' free cash flow has turned negative; the profit inflection point is unclear.
Rate-hike odds are surging
Ahead of next week's meeting, 38% of the market is already pricing in a hike.
In plain terms = the bulls are betting Middle East tensions will cool and oil will retreat; the bears see oil and AI spending as two headwinds hitting at once — too much for a simple pullback to absorb. Next week's Fed decision will be the pivotal moment.
What comes next?
The market faces twin headwinds: elevated oil prices reinforcing stagflation fears, and tech earnings making the AI-spending payback timeline even hazier.
Next week's Fed meeting is the nearest critical juncture — whether rates rise will directly determine if this pullback pauses or deepens.
This means → in the near term, the oil-price trajectory and the Fed's decision carry more weight for the broad market than any single company's earnings.
Content is for reference only, not financial advice.