Nasdaq Falls 2.1% as Earnings Jitters and Oil Surge Rattle Tech Stocks

The Nasdaq declined 2.1% on Thursday as a wave of earnings disappointments in Big Tech collided with surging oil prices, triggering a sharp rotation across the market.

The S&P 500 dropped 1.2% and the Dow fell 507 points, or 1%, with Alphabet and Tesla both posting steep losses after reporting results that rekindled investor concerns about artificial intelligence spending at scale. The selloff extended to chip stocks despite Alphabet's forecast for increased capital expenditures, a factor that typically supports semiconductor demand.

Brent crude futures spiked 7% to $100.69 a barrel, marking the highest level since May 22, according to Dow Jones Market Data. The spike followed reports of Houthi attacks on Saudi tankers and reflected broader anxieties about Middle East tensions, particularly around Iran.

The market dynamics on Thursday illustrated a meaningful shift beneath the surface. While the Nasdaq and the so-called Magnificent Seven mega-cap stocks suffered losses, David Donabedian, senior investment strategist at CIBC Private Wealth, noted that the equal-weight S&P 500, value stocks, and small-cap stocks have climbed in recent weeks. "What we're seeing today is kind of a microcosm of what we've seen over the last 2 months," Donabedian told Barron's. Industrials, utilities, energy, and health care sectors led the market on Thursday, suggesting investors rotated capital away from growth-dependent technology names into sectors viewed as more resilient.

Yield-sensitive indicators also shifted. The 2-year Treasury yield jumped to 4.36%, its highest level since February 12, 2025, with traders pricing in roughly a one-in-three probability that the Federal Reserve raises interest rates at its meeting on Wednesday.

Donabedian cautioned that the market's long assumption about geopolitical risk has grown fragile. Wall Street had largely discounted the Iran conflict for months, betting that President Trump would avoid escalation before midterm elections. "Every day this continues, I think that theory deserves to be called more into question," he said.

The earnings season, which kicked off with Big Tech results, appears to have exposed the sensitivity of growth investors to valuations and capital allocation stories rather than outright earnings misses.