S&P 500, Nasdaq end sharply lower as revived AI doubts ignite tech selloff

On Thursday, major US stock indices endured their steepest daily decline since early June as fears surrounding the AI spending race intensified following a string of high-profile earnings reports. The Nasdaq, which is heavily weighted with technology companies, plummeted by 2.6%, marking its largest single-day percentage drop since June 23.

This sharp decline was driven by microchip stock prices, and companies like Meta Platforms and Tesla suffered significant losses. Meta Platforms' stock dropped 7.0% despite beating earnings expectations, while Tesla fell 3.1% in the wake of positive free cash flow and reduced capital spending. Meanwhile, the Dow Jones Industrial Average saw a nominal gain before the closing bell.

Investors are growing increasingly wary of the AI story, attributing the market's downturn to perceived flaws in the technology's growth potential. In other news, geopolitical tensions in the Middle East caused crude oil prices to reach a five-month high, with investors concerned about potential inflationary pressures that could compel the Federal Reserve to maintain interest rate hikes.