Global financial markets reeled on Thursday as climbing oil prices driven by Middle East supply tensions collided with sticky long-term Treasury yields and sharp reversals in artificial intelligence sector shares.
Financial markets faced a synchronized squeeze as Brent crude briefly pushed above $105 per barrel and the US 10-year Treasury yield hovered around 5.35%, testing the resilience of equities worldwide according to market analysts. The cross-asset pressure pulled US equity futures lower and left Asian stocks broadly in the red, creating an unsteady backdrop for Wall Street as investors weighed tightening borrowing costs against surging geopolitical risks.
Escalating Middle East Tensions Send Brent Above $105
The immediate catalyst for the jump in energy markets was a renewal of conflict concerns involving Iran, alongside production constraints in the Gulf of Mexico where tropical weather forced operators to shut in more than 500,000 barrels of daily output. Reports indicated that Donald Trump was considering more Iran strikes, though President Donald Trump stated that the U.S. military would not attack Iran before the upcoming U.S. elections in November.
As international oil prices climbed, WTI November crude oil futures closed up 3.64% at $91.49 per barrel, while Brent December crude oil futures closed up 4.07% at $104.28 per barrel. Persistent energy inflation deepened market anxiety regarding further rate hikes by the U.S. Federal Reserve. Federal Reserve Governor Christopher Waller indicated that he expects additional interest rate hikes if the economy develops as anticipated, though he noted these adjustments do not need to occur at consecutive meetings. Meanwhile, International Energy Agency members prepared to tap additional oil from reserves, but the intervention did little to assuage worried traders. Strategic Petroleum Reserve crude stocks remain around their lowest levels since 1982, leaving fewer inventories available to absorb further supply disruptions. Broadcom Inc. was also reported to be weighing another significant transaction, having initiated $60 billion in debt financing to support Anthropic PBC’s artificial intelligence expansion.
OpenAI Revenue Shortfall Triggers AI Sector Sell-Off
Technology shares bore the brunt of the equity market retreat, pressured not only by rising borrowing costs but also by fresh doubts regarding the financial returns of the artificial intelligence boom. Financial Times reporting revealed that documents provided by OpenAI to investors indicated an annualized revenue close to $50 billion at the end of September, falling short of earlier projections near $70 billion. The variance stemmed primarily from differing accounting methods used to book sales through cloud partners.
The revenue disclosure triggered broad selling across AI infrastructure and semiconductor names. The Philadelphia Semiconductor Index plunged 3.4% in a single day. Among individual equities, Nvidia fell roughly 3% (closing down 2.94%), Oracle dropped more than 5.5% in its steepest single-day decline since July 16, Intel slid over 5% (down 5.34%), and Micron Technology declined 4.8%. Cloud-service providers Nebius and CoreWeave both dropped more than 7%, while optical communications firm Coherent tumbled 9.63%. Additional pressure hit semiconductor firms including Advanced Micro Devices dropping 3.9%, Broadcom falling 4.35%, and Super Micro Computer seeing steep declines alongside a 3.01% drop in TSMC’s American Depositary Receipts to close at $457.99.
Energy Stocks Lift Dow as Nasdaq and S&P 500 Fall
Despite the sharp sell-off in technology and chip stocks, broader market indices displayed a distinct divergence. The Nasdaq Composite dropped 1.25% to finish at 27,193.34 points, and the S&P 500 fell 0.47% to 7,765.36 points, marking its second consecutive session of declines. Conversely, the Dow Jones Industrial Average managed to buck the trend, edging up 0.10% to close at 51,231.64 points as energy stocks rallied.
Energy giants profited directly from the crude surge, with BP rising more than 4% and both Shell and Chevron gaining over 3%. Fixed-income markets experienced their own turbulence. The US 30-year bond auction successfully wrapped up a week of heavy Treasury issuance totaling nearly $120 billion. Treasury yields initially rose before retreating, with the benchmark 10-year yield dropping 5 basis points to 5.227%. Analysts observed that higher yields are beginning to generate their own intrinsic demand as buyers step in at attractive price points, while overall trading volume across US exchanges reached 18.81 billion shares, exceeding the 20-day average of 17.74 billion shares.
