Stocks Slide as AI Trade Falters and Oil Rallies: Markets Wrap
(Bloomberg) — Stocks slid in a broad retreat from riskier assets as a slate of technology earnings fell short of elevated expectations and escalating hostilities in the Middle East pushed oil prices higher.
Nasdaq 100 futures retreated 1.8%, threatening to erase much of the index’s 2.2% gain this week. S&P 500 contracts fell 1.1%. A disappointing outlook from chip-equipment maker Lam Research Corp. sent its shares more than 7% lower in early trading. Tesla Inc. dropped 4.9% after cutting back on spending plans.
Brent approached $112 a barrel as the US ordered some diplomats to leave Saudi Arabia over the threat from Houthi militants. Bitcoin posted its biggest drop in two weeks in the broader flight from risk, while Treasuries gained, pushing 10-year yields down six basis points. The yen and Swiss franc were the biggest beneficiaries among major currencies.
The latest round of corporate reports is testing whether earnings can keep the AI trade on track amid mounting concerns that heavy spending on data centers and computing capacity will take longer to generate returns. The bar is high, as even Meta Platforms Inc. fell despite showing evidence that its investments were starting to pay off.
“The message seems increasingly clear: the market is still willing to reward heavy AI investment, but is becoming much more demanding about returns,” said Santiago Mateo, head of equity at CaixaBank AM. “Investors want evidence that investment is translating into stronger growth, better monetization and ultimately earnings.”
Europe’s smaller exposure to technology didn’t spare it from the equity selloff. The Stoxx 600 fell 1%, with banks and mining stocks leading declines on a busy day for earnings. Birkin bag maker Hermès International SCA fell more than 7% after reporting no sales growth in the region that includes China.
Meanwhile, Chinese stocks entered bear-market territory. The CSI 300 Index closed 1.8% lower on Thursday, bringing its total losses from a high in June to 20%. Gauges of major Chinese companies and tech firms also plunged in Hong Kong, with a monthslong selloff showing few signs of abating.
German bunds were bid higher in Europe, while French yields continued their advance. The premium on French 10-year yields over their German counterparts topped 170 basis points.
With no big tech earnings due for another week, the rotation out of semiconductors and other AI-related stocks is set to continue, said Roberto Scholtes at Singular Bank.
The dominant market dynamic in recent weeks has been the unwinding of AI-related positions by hedge funds,” Scholtes said. “I expect this trend to persist for a while, unless we see a substantial decline in bond yields triggered by a short squeeze, or major geopolitical developments.”
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.
Corporate Highlights:
Barclays Plc said it’s cutting 5,000 jobs, or about 5% of total headcount, as part of a “technology-enabled” effort to reduce costs as it adopts artificial intelligence across the bank. Nestle SA posted strong third-quarter sales growth as demand for snacks and pet food strengthened in emerging markets. Hermès International SCA reported no sales growth in the region that includes China last quarter. The Chinese AI pioneer DeepSeek has raised about 100 billion yuan ($15 billion) in its latest fundraising round, one of the country’s largest ever. SAP SE reported higher growth for its cloud products than anticipated in a sign that the boom in artificial intelligence hasn’t undermined demand for the German software maker’s offerings. Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1.1% as of 11:01 a.m. London time S&P 500 futures fell 1.1% Nasdaq 100 futures fell 1.8% Futures on the Dow Jones Industrial Average fell 0.7% The MSCI Asia Pacific Index fell 1.6% The MSCI Emerging Markets Index fell 2.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro fell 0.1% to $1.1219 The Japanese yen rose 0.9% to 156.79 per dollar The offshore yuan was little changed at 6.6730 per dollar The British pound was little changed at $1.3392 Cryptocurrencies
Bitcoin fell 3.2% to $81,903.81 Ether fell 3.4% to $2,407.29 Bonds
The yield on 10-year Treasuries declined six basis points to 5.06% Germany’s 10-year yield declined five basis points to 3.37% Britain’s 10-year yield declined two basis points to 5.36% Commodities
Brent crude rose 2.7% to $111.79 a barrel Spot gold fell 1.3% to $4,087.23 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Ruhell Amin.
©2026 Bloomberg L.P.
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