US stocks fell sharply on Thursday as investors reacted to fresh spending plans from Alphabet and Tesla, while oil climbed above $100 a barrel after renewed attacks in the Red Sea intensified concerns over the widening conflict in the Middle East.
The Nasdaq Composite led the decline, dropping 2.1% and briefly falling below the 25,000 mark for the first time since May. The S&P 500 lost 1.2%, while the Dow Jones Industrial Average retreated 0.9%, extending losses after another busy round of corporate earnings.
Technology stocks came under heavy selling pressure following results from Alphabet and Tesla, released after Wednesday’s closing bell.
Although Alphabet reported a strong quarterly performance, investors focused on the company’s higher capital expenditure guidance as markets continued assessing whether substantial artificial intelligence investment will deliver sufficient returns.
Tesla also unsettled investors after chief executive Elon Musk described 2026 as a “massive capex year”, saying spending would be directed towards Optimus humanoid robots, robotaxis and data centres.
Geopolitical tensions in the Middle East remained firmly in focus with brent crude futures climbing above $100 a barrel, while West Texas Intermediate also advanced after Iran-backed Houthi forces said they had attacked tankers in the Red Sea, adding to concerns over global energy supplies as the conflict involving the US and Iran continued to widen.
The jump in oil prices triggered a sell-off in US government bonds, pushing the 10-year Treasury yield to its highest level in around 18 months as investors weighed the inflationary impact of higher energy costs. Rising crude prices also reduced expectations that the Federal Reserve would cut interest rates this year.
London stocks also finished lower as rising oil prices weighed on sentiment. The FTSE 100 declined 0.7%, while the FTSE 250 fell 1.3%, although gains among energy producers helped limit losses on the blue-chip index.
Higher crude prices lifted BP by 3.1% and Shell by 1.6%, placing both companies among the FTSE 100’s strongest performers.
Segro also advanced 6.5% after confirming it was prepared to recommend Prologis’ final takeover proposal, which values the property company at around £14 billion through a share exchange alongside a partial cash alternative worth up to £3.5 billion.
Centrica recorded the largest decline on the FTSE 100, falling 10% after reporting lower first-half operating profit and warning that earnings from Centrica Energy in 2027 are expected to remain below current analyst forecasts.
On the FTSE 250, CVS Group dropped 6% despite reporting higher annual revenue, with the veterinary services provider pointing to subdued consumer confidence affecting visits to companion animal practices. Mitchells & Butlers lost 5.1% after saying prolonged hot weather reduced demand at its food-led venues during the third quarter.
On AIM, Mission Group jumped 24% after forecasting a 27% increase in first-half headline pre-tax profit, supported by a strong pipeline of new business and continued expansion in the United States.
