U.S. stock markets fell sharply on Thursday as fears of renewed attacks on Iran by Israel and the United States sent oil prices higher and major technology stocks failed to hold on to recent gains.
The S&P 500 was down 1.3% as of 2 p.m. ET, while the tech-heavy Nasdaq was down 2.5%. The price of international Brent crude rose nearly 4%, while U.S. crude gained 2.5%.
Demand for Treasuries also increased – bucking the trend in recent months – as investors sought safe-haven assets while riskier assets, like technology stocks, sold off. This pushed the 10-year yield below 5% for the first time since late September.
The market moves were triggered in part by Wednesday’s announcement that Israel and the United States were preparing for a military operation in Iran after November’s midterm elections.
Likely targets include Iranian energy infrastructure and nuclear sites, according to the New York Times.
US military and diplomatic personnel were also evacuated from several Middle Eastern countries on Wednesday, NBC News reported.
Iranian officials have vowed widespread retaliation for any strike, naming critical Middle East data center sites and undersea internet cables as potential targets.
“It’s been another tough 24 hours for markets as investors grapple with concerns over AI growth, rising oil prices and lingering fiscal stress,” Henry Allen, director and macro strategist at Deutsche Bank, wrote in a note to clients on Thursday.
Major technology stocks led the stock market decline, with Meta and Tesla falling after both companies reported quarterly results on Wednesday.
Meta’s earnings and revenue beat forecasts, but only after excluding billions of dollars in legal penalties the company paid last quarter. It also warned investors that it plans to increase spending in the coming year to meet demand for computing power.
A separate regulatory filing revealed that Meta intends to spend an additional $825 billion on contracts related to building its AI infrastructure.
Tesla, meanwhile, said it was limiting its capital spending plans, disappointing investors who were hoping for a signal of more aggressive expansion.
The Nasdaq’s slide deepened Thursday morning after Nvidia CEO Jensen Huang said during an appearance on CNBC that the capital needed to finance the AI investment boom was becoming “scarce” due to rising interest rates and a glut of existing spending commitments.
Despite Thursday’s rout, the S&P 500 remains near the all-time highs it set earlier this month.
A massive sell-off in French government debt has also driven European stocks lower in recent weeks.
A significant market decline in the United States could also further harm the Republicans’ prospects in the upcoming midterm elections.
President Donald Trump frequently points to strong stock market gains as proof that his economic agenda has enriched Americans.
A major market drop on Wall Street ahead of the Nov. 3 election would undermine a central argument in favor of Trump and the Republican Party.
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