Stocks Fall on AI Trade Jitters as Brent Tops $85: Markets Wrap
(Bloomberg) — A selloff in chipmakers dragged down stocks on concerns over whether massive artificial-intelligence investments will justify lofty valuations, with the market also falling as higher oil prices lifted bond yields.
Wall Street’s best-performing corner this year was gripped by a renewed bout of volatility that sent a closely watched gauge of semiconductor firms lower by 3.5%. A solid outlook from Taiwan Semiconductor Manufacturing Co. failed to inspire global investors after the main chipmaker for Nvidia Corp. raised its spending plans. The Nasdaq 100 dropped 1.2%.
Traders are grappling with whether tech stocks have grown too richly valued amid all the uncertainty over when trillions of dollars in spending will deliver lucrative returns. The four biggest US AI operators including Meta Platforms Inc. and Alphabet Inc. are expected to spend more than $725 billion this year alone.
The fact that TSMC is seeing such a negative response to strong earnings must be raising concerns about this all-important leadership group among investors, according to Matt Maley at Miller Tabak.
“The action in the chip stocks going forward is still the most important issue for the stock market,” he said. “They are definitely showing some meaningful cracks, so they’re going to have to see a strong and sustainable rebound soon or it will raise some raise some real warning flags.”
Heightened geopolitical risks also kept a lid on risk appetite, with the US intensifying strikes against Iran, hitting an oil tanker near the country’s main export terminal. Brent topped $85, deepening inflation worries and rekindling bets that the Federal Reserve’s next rate move will be a hike.
Traders also parsed the latest economic reports. Jobless claims fell last week while retail sales rose modestly in June, dragged down by a drop in gas-station receipts that masked strong gains at some merchants.
“Despite challenges, consumers are still spending and the labor market shows no signs of cracking,” said Ellen Zentner at Morgan Stanley Wealth Management “This type of data won’t move the Fed’s needle either way, but it underscores the ongoing resilience of the US economy.”
Consumer spending is a critical engine of the economy, so investors want to see households continue opening their wallets, according to Bret Kenwell at eToro. June’s retail sales report was not particularly robust, but it was not a red flag either — especially given the upward revision to May, he said.
“Earnings should help separate signals from noise, revealing whether consumers remain resilient or are finally starting to pull back,” Kenwell concluded.
Corporate Highlights:
UnitedHealth Group Inc. raised its outlook for the year and reported quarterly profit well ahead of Wall Street’s views, helping to solidify the company’s earnings recovery after a historic collapse. Abbott Laboratories raised its profit guidance following a stronger-than-expected second quarter driven by improved performance across most of its business lines. Merck & Co. won US regulatory approval of a pill that rivals powerful injections for cutting dangerous cholesterol levels, betting the easier-to-take medicine will find more success with high-risk patients in combating the leading cause of death in the world. JB Hunt Transport Services Inc. reported second-quarter adjusted earnings per share that topped analyst estimates, signaling stronger freight rates and tighter trucking capacity are starting to flow through to earnings. Uber Technologies Inc. has agreed to buy Delivery Hero SE in a deal that values the German food-delivery company at $14.8 billion. Eli Lilly & Co. agreed to buy AtaiBeckley Inc. for as much as $3.8 billion, underscoring interest from drugmakers in the once-fringe area of psychedelic medicine. Some of the main moves in markets:
Stocks
The S&P 500 fell 0.4% as of 10 a.m. New York time The Nasdaq 100 fell 1.2% The Dow Jones Industrial Average was little changed The Stoxx Europe 600 fell 0.4% The MSCI World Index fell 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1451 The British pound fell 0.2% to $1.3508 The Japanese yen was little changed at 162.32 per dollar Cryptocurrencies
Bitcoin fell 0.9% to $64,323.67 Ether fell 2.2% to $1,881.4 Bonds
The yield on 10-year Treasuries advanced four basis points to 4.58% Germany’s 10-year yield advanced three basis points to 3.15% Britain’s 10-year yield advanced five basis points to 4.98% Commodities
West Texas Intermediate crude rose 0.6% to $80.09 a barrel Spot gold fell 1.7% to $3,990.02 an ounce ©2026 Bloomberg L.P.
