Market sell-off gains steam on Iran war, high AI spending fears

Key Points:

• U.S. equity markets experienced a sharp sell-off on Thursday, driven by fears of renewed military action against Iran, causing oil prices to surge and major tech stocks to decline, with the S&P 500 down 1.3% and the Nasdaq falling 2.5%.
• Reports indicated that Israel and the U.S. are preparing for potential strikes on Iran’s energy and nuclear infrastructure, prompting evacuations of U.S. personnel in the Middle East and raising concerns about Iranian retaliation targeting critical infrastructure.
• Treasury bonds saw increased demand as investors sought safe-haven assets amid market volatility, pushing the 10-year Treasury yield below 5% for the first time since September.
• Major tech companies Meta and Tesla declined after earnings reports, with Meta revealing substantial AI infrastructure spending plans and Tesla scaling back capital expenditures, while Nvidia’s CEO highlighted tightening capital availability for AI investments due to higher interest rates.
• Despite the sell-off, the S&P 500 remains near record highs, but a significant market downturn ahead of the November midterm elections could negatively impact Republican prospects by undermining President Trump’s economic messaging.