US equity indexes declined on Thursday as quarterly results from Meta Platforms and Tesla failed to sustain momentum in the artificial intelligence trade, while geopolitical risks involving Iran pushed crude oil prices higher. The Nasdaq Composite dropped 2.4% to close at 26,051.5, the S&P 500 fell 1.3% to 7,655.7, and the Dow Jones Industrial Average slipped 0.2% to 52,751.5 after midday trading. Technology and communication services sectors led the losses, while consumer staples and utilities provided relative support, indicating a shift toward defensive positioning. The CBOE Volatility Index, often referred to as the fear gauge, jumped 15% to 19.22.
Meta Platforms shares fell 7.2%, marking one of the steepest declines among S&P 500 and Nasdaq constituents. The company reported a $9.89 billion litigation settlement charge related to teen mental health and social media issues. Additionally, Meta raised its capital expenditures guidance by $5 billion at the lower end to a range of $135 billion to $145 billion. The company’s board also approved a new class of publicly listed, non-voting common stock scheduled for launch in January 2027.
Tesla shares declined 2% after the automaker reported lower adjusted earnings and revenue for the third quarter. DA Davidson analysts noted in a research report that high-growth technology stocks faced renewed pressure because earnings from Tesla and Meta did not alleviate concerns regarding the scale of AI-related spending. The firm added that the rebound in oil prices further weighed on investor sentiment.
Lam Research shares sank 11%, recording one of the largest drops in the major indices. The semiconductor equipment maker flagged supply-chain constraints and projected lower sales in China, which overshadowed its fiscal first-quarter earnings and revenue beats. According to data compiled by Finviz, 15 of the 20 worst-performing stocks with market capitalizations exceeding $200 billion were from the technology sector. The iShares PHLX Semiconductor Exchange-Traded Fund (SOXX), which manages approximately $48.43 billion in assets, fell 6.2% as investors pulled back from AI-related positions.
In contrast, Procter & Gamble shares rose 6%, leading the Dow Jones Industrial Average higher after the company reported increased fiscal first-quarter core earnings and net sales.
Geopolitical tensions in the Middle East contributed to market volatility. The New York Times reported, citing US officials, that the United States and Israel have outlined plans for new strikes on Iran following next month’s US midterm elections. Al Jazeera reported that Iran’s Islamic Revolutionary Guard Corps stated that renewed attacks could lead Tehran to invade neighboring countries and target bases used in US military operations as part of an "offensive" strategy. Following fresh attacks on Saudi infrastructure, the US ordered non-emergency government employees and their families to leave Saudi Arabia.
Crude oil prices surged in response to these developments. The front-month West Texas Intermediate contract jumped 2.1% to $99.23 per barrel, while Brent crude advanced 3.2% to $112.31 per barrel. DA Davidson analysts observed that Brent crude reached its highest level since May after Houthi attacks in Saudi Arabia heightened fears of regional escalation and potential disruptions to oil supplies from a key exporting region.
Precious metals declined amid the risk-off environment. Gold futures dropped 2.4% to $4,051.8 per ounce, and silver futures fell 5% to $54.80 per ounce.
US Treasury yields decreased after midday trading. The 10-year yield fell 11.9 basis points to 5.03%, the 30-year rate dropped 9.7 basis points to 5.34%, and the two-year yield declined 10 basis points to 4.72%.
Economic data released Thursday showed mixed signals for the US labor market and economic outlook. The Conference Board’s Leading Economic Index held steady in September, differing from expectations of a 0.1% decrease indicated by a Bloomberg-compiled poll and following a 0.1% decline in August. Initial jobless claims fell to 194,000 for the week ended October 17, down from an upwardly revised figure of 200,000 and below the 200,000 expected by analysts surveyed by Bloomberg. The four-week moving average for jobless claims slid by 1,000 to 197,750.