US stocks ended mixed on Thursday, with the Nasdaq Composite posting its steepest decline among the major indexes as artificial intelligence stocks came under pressure and rising oil prices added to inflation concerns.
The Nasdaq fell 1.24% to 27,197.10 points, while the S&P 500 lost 0.46% to 7,765.70. The Dow Jones Industrial Average gained 0.09% to 51,225.48.
AI stocks fall after OpenAI revenue report
Technology and semiconductor stocks declined after a Financial Times report said OpenAI’s annualised revenue was about $20 billion below the figure the company had previously signalled.
Oracle shares fell more than 5%, while Nvidia and Advanced Micro Devices declined about 2% and 3%, respectively.
Semiconductor stocks were among the weakest performers after having gained more than 80% so far this year.
The report added to concerns around the large capital requirements of the AI industry.
Broadcom and Oracle also faced pressure after reports that Broadcom was arranging $50 billion in financing for OpenAI, while Oracle was seeking additional funding.
Investors are also looking ahead to the third-quarter earnings season, which begins next week.
Palantir was among the few technology stocks to gain, rising 2% after Goldman Sachs upgraded the company to Buy from Neutral.
The firm said the company could benefit from increasing demand for sovereign AI and customised applications.
Oil prices rise as Middle East tensions persist
Oil prices climbed as concerns over supply disruptions in the Middle East continued to weigh on markets.
Brent crude settled 3.6% higher, while West Texas Intermediate gained 3.19%.
Oil prices were supported by attacks on shipping in the Strait of Hormuz and a reduction in US oil production linked to hurricane activity.
US crude prices have risen more than 60% this year as the conflict involving Iran has tightened global supplies. Higher energy prices have also increased concerns that inflation could remain elevated.
President Donald Trump later said the US would not attack Iran before the midterm elections, helping oil prices retreat from their session highs.
Treasury yields remain elevated
Treasury yields remained close to multi-year highs as investors assessed the impact of higher oil prices on inflation and the Federal Reserve’s interest-rate outlook.
The benchmark 10-year Treasury yield was last down more than 7 basis points at 5.22%, while the 30-year yield fell 13 basis points to 5.60%.
The moves followed a strong auction of 30-year Treasury bonds.
The rise in yields has added to volatility in equities, particularly as investors assess whether higher energy prices could keep inflation elevated and lead to further interest-rate increases.
Markets currently expect the Federal Reserve to leave rates unchanged this month, while the probability of a December rate hike is nearly 70%, according to CME’s FedWatch tool.
Fed Governor Christopher Waller has said further rate increases will probably be necessary, although the timing remains flexible.
Other stocks move on company news
Outside the technology sector, PepsiCo shares gained after the company said it would pursue additional spending cuts while lowering its annual core profit forecast.
Starbucks shares edged lower following reports that the coffee chain was exploring a potential acquisition of Chipotle Mexican Grill. Chipotle shares jumped on the report.