AI Trade Stumbles After Tech Earnings, Oil Rallies: Markets Wrap
(Bloomberg) — Stocks fell as megacap earnings failed to reassure investors about the rebound in the artificial intelligence trade, Chinese equities neared a bear market and escalating Middle East tensions drove oil prices higher. Treasuries and the yen gained on haven demand.
Contracts for the Nasdaq 100 Index slipped 1.6% and those for the S&P 500 dropped 0.9%, as a split set of results from Tesla Inc. and Meta Platforms Inc. raised doubts about the recent rebound in AI stocks.
In Asia, the Kospi Index — a barometer for the AI trade — declined 4.1% and was set for its lowest close since April. China’s CSI 300 Index fell 2% and was set for a bear market. A gauge of Chinese tech stocks in Hong Kong headed for its weakest close since September 2024, with Alibaba Group Holding Ltd. among the losers. The broader MSCI Asia Pacific Index lost 2%, set for its lowest close since end-July.
Tesla shares dropped 3.3% in post-market trading after cutting its capital-spending forecast. Meta Platforms, however, rose 2.2% after hours as the company boosted its bet on AI with spending outlook. Shares of the semiconductor capital equipment company Lam Research Corp. fell 7.4% in extended trading after a weaker-than-expected earnings forecast.
“The market is a hard one to please on capital expenditure right now,” said Tim Waterer, chief market analyst at KCM Trade. “It frets when companies ramp spending, and it frets when they pull it back, as we’ve just seen with Tesla. In this environment, it’s almost impossible to get the balance right.”
Adding to the pressure, crude oil advanced after deadly attacks in Saudi Arabia heightened concerns that escalating Middle East hostilities could hit supply. Brent climbed 2.4% to $111.40 a barrel. Treasuries and European bond futures rose, while Bitcoin and gold declined.
The latest corporate results will test whether earnings can keep the AI trade on track as investors weigh strong growth against the mounting cost of funding the industry’s expansion. Concerns have grown that heavy spending on data centers and computing capacity may take longer to generate returns, while this year’s blistering stock rally has raised questions about stretched valuations and the risk of an AI bubble.
“Markets are basically telling us we are moving on from trading AI vibes and narrative to now requiring a pretty high bar for what an earnings beat looks like,” Kaanhari Singh, APAC head of equity derivatives sales at Barclays Plc., said on Bloomberg TV. “That’s both in terms of capex forward guidance, but also for the path of monetization.”
What Bloomberg Strategists Say…
“Macro investors may find it tougher to turn optimistic today as there is now a quiet period on tech earnings until Microsoft and Alphabet in the middle of next week. This will put firm oil prices back into the center of attention, especially after US State Department ordered some diplomats out of Saudi Arabia.”
— Mark Cranfield, MLive Strategist. Click here for the full analysis.
In other corners of the market, gold declined 1.6% to trade around $4,075 an ounce. Bitcoin fell over 2% to about $82,600.
In stocks, equity-index futures indicated European shares will drop 1% at the open. SoftBank Group Corp.’s market value is poised to halve from its peak in June.
Treasuries climbed across the curve Thursday, pushing long-end yields to the lowest in a month, as renewed doubts about the durability of the AI trade drove investors toward haven assets. The 30-year yield dropped three basis points to 5.38%, its lowest since Sept. 23. The yen was the biggest gainer against the dollar among Group-of-10 currencies.
“The dip in S&P 500 futures is giving the yen a boost,” said David Forrester, a senior strategist at Credit Agricole CIB in Singapore. “Importantly, this is across the board and even against the dollar, showing the yen’s safe-haven status in the event of AI boom disruptions.”
Attention is also on the rising tensions in the Middle East.
The US State Department issued an ordered departure for non-emergency personnel and their families from Saudi Arabia because of the growing threat from Houthi militants in neighboring Yemen.
The US and Israeli militaries have developed specific plans for renewed strikes against Iran after the American midterm elections, the New York Times reported, citing US officials and other people briefed on the deliberations.
Investors aren’t “comfortable with oil rising above 110,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management. “We are regularly making new highs in oil and energy products, which is stagflationary. Implied volatility on oil options is rising once again reflecting uncertainty about the future path of energy as we approach the Northern Hemisphere winter.”
Corporate Highlights:
European Earnings: SAP SE reported higher growth for its cloud products than anticipated; Nestle SA posted strong third-quarter sales growth; Nokia Oyj’s third-quarter profit beat analyst expectations; Roche Holding AG sales climbed more than expected. US Earnings: Texas Instruments Inc. gave a strong revenue forecast; International Business Machines Corp. reported sales that topped analysts’ estimates. Chinese AI pioneer DeepSeek has raised about 100 billion yuan ($15 billion) in its latest fundraising round to compete globally with Anthropic PBC and OpenAI. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.9% as of 6:50 a.m. London time Nasdaq 100 futures fell 1.6% The MSCI Asia Pacific Index fell 2% The MSCI Emerging Markets Index fell 2.3% Japan’s Topix fell 1.3% Hong Kong’s Hang Seng fell 3.1% The Shanghai Composite fell 1.5% Euro Stoxx 50 futures fell 1% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1244 The Japanese yen rose 0.5% to 157.35 per dollar The offshore yuan was little changed at 6.6737 per dollar The British pound was little changed at $1.3398 Cryptocurrencies
Bitcoin fell 2.3% to $82,675.4 Ether fell 2.3% to $2,434.42 Bonds
The yield on 10-year Treasuries declined three basis points to 5.09% Japan’s 10-year yield was unchanged at 2.885% Australia’s 10-year yield declined three basis points to 5.25% Commodities
Spot gold fell 1.7% to $4,071.79 an ounce West Texas Intermediate crude rose 2% to $99.11 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Liau Y-Sing and Ruth Carson.
©2026 Bloomberg L.P.
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