Economic Update: Oil Tops $111 as AI Stock Selloff Drags Nasdaq Down More Than 2%

Brent crude climbed above $111 a barrel Thursday, its highest level since May, while a selloff in artificial intelligence stocks pulled the Nasdaq down more than 2%, the Associated Press reported.

The Nasdaq composite was down 2.2% as of 10:45 a.m. Eastern time. The S&P 500 fell 1.4%, and the Dow Jones Industrial Average was down 0.6%, or 295 points.

The losses were concentrated in technology. Most stocks in the S&P 500 rose, but they were outweighed by drops in the most valuable tech companies.

Nvidia fell 3.8% and was the heaviest weight on the S&P 500 because it is the largest stock on Wall Street by total value.

Meta Platforms lost 6.4% after announcing a new class of stock to help pay for AI investments.

Chip-equipment maker Lam Research tumbled 9.7% even though its profit and revenue topped forecasts. The midpoint of its fourth-quarter profit forecast came in slightly below analysts’ expectations, AP reported.

Intel was down 5.3% early in the session, and AMD, Qualcomm, Marvell Technology, Broadcom and Micron Technology slipped between 1.9% and 5.2%, Reuters reported.

“The thing that makes these AI names more vulnerable is just that they have such high valuations already,” Brendon Dashiell, portfolio manager for investment research at Bogart Wealth, told Reuters.

AI stocks have been shaky on worries about the cost of borrowing to build data centers and buy chips, and on concerns that prices simply ran too high, according to AP.

The weakness started in Asia. South Korea’s Kospi fell 3.5%, Hong Kong’s Hang Seng dropped 3% and Japan’s Nikkei 225 sank 2.7%, AP reported.

Attacks in Saudi Arabia Lift Oil

Brent rose 2.8% to $111.81 a barrel as of 11:07 a.m. Eastern time after nearly reaching $113, CNBC reported. U.S. benchmark West Texas Intermediate gained 1.7% to $98.83 after topping $100 earlier.

Iran-aligned Houthis hit several targets in Saudi Arabia on Wednesday. Two people were killed at a civilian airport in Dammam and two more in a drone attack on a Saudi oilfield, The Guardian reported.

The State Department ordered non-emergency government employees and their families to leave Saudi Arabia, citing escalating Houthi attacks on civilian targets, according to CNBC. Saudi Aramco told staff to evacuate its Dhahran headquarters, Reuters reported.

Oil also rose after The New York Times reported, citing unnamed U.S. officials, that American and Israeli planners have drawn up plans for renewed strikes on Iran after next month’s midterm elections, CNBC noted.

Asked about Iran late Wednesday, President Trump said “something one way or the other” will “happen fairly soon,” according to CNBC.

Some analysts say households are better able to absorb the hit than in past oil shocks. “$100 oil today is very different than $100 oil, you know, 20, 30 years ago,” David Wagner of Aptus Capital Advisors told CNBC.

Airlines are feeling it. American Airlines warned that high fuel costs would push it into a loss this year, citing “historic fuel cost pressure,” The Guardian reported.

Investors moved into government bonds. The 10-year Treasury yield fell to 5.01% from 5.13% late Wednesday, AP reported, though it remains well above its 3.97% level before the war with Iran.

The jobs data were steadier. Initial jobless claims slipped to a seasonally adjusted 194,000 for the week ended Oct. 17, the Labor Department reported, near the lowest levels in nearly six decades of records, CNBC noted.

Some companies bucked the decline. Procter & Gamble rose 5.8% after topping profit expectations, AP reported, and Lockheed Martin climbed 9.4% after raising its annual sales and profit forecast, according to Reuters.

Federal Reserve officials meet next week. Markets expect the Fed to hold off on a rate hike in October before raising rates a quarter point in December, CNBC reported.

Content created by Conservative Daily News and some content syndicated through CDN is available for re-publication without charge under the Creative Commons license. Visit our syndication page for details and requirements.