Market sell-off gains steam on Iran war, high AI spending fears
U.S. stock markets experienced a sharp decline due to rising geopolitical tensions in the Middle East and investor anxiety over high AI-related capital expenditures. Oil prices surged as markets reacted to potential military escalations involving Iran.
Why it matters
The market volatility underscores the fragility of investor confidence when faced with the dual pressures of regional war and the massive, unproven financial returns of AI infrastructure spending.
U.S. equity markets sold off sharply Thursday, as fears that Israel and the U.S. would restart attacks against Iran sent oil prices higher and major tech stocks failed to hold on to recent gains. The S&P 500 closed down 1.2%, while the tech-heavy Nasdaq dropped 2.6%. The price of international Brent crude climbed nearly 4% to $113 a barrel, its highest level since May, while U.S. crude gained more than 2% to close at more than $99 a barrel. Demand for Treasury bonds also increased — bucking the trend of the past several weeks — as investors sought out the safe-haven assets amid riskier ones like tech stocks selling off. The yield on the 10-year Treasury note fell below 5% for the first time since late September. The market moves were sparked in part by reports that Israel and the U.S.
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