U.S. stocks fell on Thursday as concerns about artificial-intelligence investment hit technology shares and rising oil prices added to uncertainty over the economic outlook. The Nasdaq Composite led the decline, with semiconductor companies under particular pressure as investors assessed corporate earnings and spending plans. The retreat extended beyond equities, while investors bought government bonds as concerns about slower AI infrastructure expansion overshadowed inflation fears stemming from higher oil prices.

The Nasdaq Composite dropped 2.1% during the session, reversing Wednesday’s gains, while the S&P 500 declined 1.2% and the Dow Jones Industrial Average slipped 0.2%. Oil reached a five-month high, with Brent crude at $112 per barrel and West Texas Intermediate at $100. The contrast between the Nasdaq and the Dow highlighted the concentration of selling in technology. Bitcoin also fell below $82,000 as investors reduced exposure to riskier assets alongside the equity sell-off.

Chip stocks had signalled weakness before regular trading began. The iShares Semiconductor ETF was down about 4% premarket, trading below Tuesday’s intraday low of $489. In premarket trading, Lam Research fell about 9% following its Wednesday evening results, while Applied Materials and KLA were each down about 6%. AMD, Intel and Sandisk declined 4% to 5%, compared with a smaller 2% fall for Nvidia. The breadth of the declines showed that pressure was not confined to a single company amid concerns about slower AI infrastructure expansion.

Read more: Brent crude tops $113 as supply threats push prices to highest since May

Meta and Tesla each lost more than 3% at Thursday’s open. Investors weighed Meta’s quarterly results alongside its announcement of a 2-for-1 stock split. Tesla’s shares were volatile despite third-quarter adjusted earnings per share of $0. Revenue of $28.05 billion was below expectations of $28.13 billion. Its free cash flow and capital spending were better than expected, but investors also had to balance lower 2026 capital expenditure against higher spending in 2027 and 2028 on Optimus, Cybercab and Terafab. The reaction underscored the importance of future investment commitments alongside current earnings.

Energy prices added a separate source of pressure. Oil rose to its highest level since May amid concerns that the Middle East war could escalate after the Nov. 3 U.S. midterm elections. According to a report citing unnamed U.S. officials, the United States and Israel had prepared plans for renewed attacks on Iran after the vote. Saudi Arabia also said attacks had struck the airport of Dammam and an Aramco oil field. Brent was up more than 50% since the Iran war began in late February.

The Treasury market nevertheless moved in the opposite direction to what a straightforward inflation scare might suggest. The 10-year yield slipped below 5% and was on course for its largest one-day decline in more than two years, while the 5-year yield was falling faster. Investors were buying bonds even as crude rose. Concerns about slower AI infrastructure expansion were taking precedence over oil-related inflation fears, while bond-market measures showed little increase in expected inflation.

Read more: 10-year Treasury yield falls below 5% to lowest in nearly a month

Longer-term inflation pricing offered a similar contrast to the oil market. The 5-year breakeven rate, measured by the yield gap between conventional and inflation-protected Treasuries, was slightly below its level before the war. The 5y5y inflation swap, which reflects expected average inflation over the five years beginning five years ahead, had changed little. Those measures suggested confidence that monetary policy would contain persistent inflation. Labour-market figures, meanwhile, remained relatively firm: jobless claims fell to 194,000 last week, the lowest in three months, indicating that layoffs were still limited.

Not all corporate results met with selling. Blackstone rose 4% on Thursday morning after executives presented an encouraging outlook for investment sales and fee growth. Chief financial officer Michael Chae told analysts that performance-fee realizations from investments already under contract and expected to close in the fourth quarter would exceed total net realizations in the third quarter. He also reaffirmed expectations for double-digit base management fee growth in 2027. That outlook helped counter a 34% year-on-year fall in third-quarter net realizations and a 9% decline in distributable earnings.

Separately, Spotify’s shares advanced after earnings in Wednesday’s trading update despite falling short on some measures. Co-chief executive Alex Norström said the company had built a strong business that kept compounding, was investing where it identified growth opportunities and was seeing costs moderate. Its positive share-price response provided an earlier example of an earnings-related gain despite misses on some metrics. Although recorded on different days, Spotify’s advance and Blackstone’s gain showed that investors remained receptive to some company-specific prospects amid broader market concerns.

Corporate spending plans and inflation expectations remained central to the market’s contrasting signals. A 5-year inflation-protected Treasury auction was scheduled for 1 p.m. ET Thursday, offering a test of confidence in the Federal Reserve’s inflation outlook under Chair Kevin Warsh. For equities, Tesla’s higher planned investment in 2027 and 2028 and Blackstone’s expected fourth-quarter exits highlighted the different corporate outlooks investors were weighing. Developments in the Middle East remained an additional uncertainty, with sharply higher oil prices so far accompanied by little movement in longer-term market expectations for inflation.