U. S. stocks took a hit Thursday. The S&P 500 slipped 0.6%, and the Nasdaq Composite fell 1.2%. The Dow Jones Industrial Average wasn't spared either, shedding 55 points, or 0.1%. Investors were wrestling with the dual pressures of rising oil prices and a slump in tech shares.
Oil prices spiked after President Donald Trump made waves with comments showing no interest in negotiating with Iran to resolve Middle East tensions. More fuel was added to the fire with reports hinting at potential U. S. military moves in the region. But Trump's later reassurance—no attacks before midterms—helped ease the oil surge a bit. Brent crude climbed 3% to about $103 per barrel, while West Texas Intermediate futures ticked up 3% to around $90.
The tech sector wasn't having a good day either. The Financial Times dropped a bombshell: OpenAI's annualized revenue was $20 billion shy of expectations. This news rocked tech stocks, with Oracle tumbling over 5%. Chipmakers Nvidia and Advanced Micro Devices also took hits, losing 3% and 4%, respectively.
Investors had their eyes on Treasury yields too. Earlier in the week, yields hit new 24-year highs. The 10-year yield dipped over 3 basis points to 5.244%, and the 30-year yield fell 4 basis points to 5.621%. These changes came on the heels of a successful 30-year Treasury auction.
Ross Mayfield from Baird weighed in, pointing out that energy-driven inflation pressures are shaping the Federal Reserve's stance and impacting the yield curve's long end. He noted that a significant drop in oil prices—say, from $90 to $70 per barrel—could lead to notable yield decreases.
Despite the recent market rollercoaster, Mayfield noted equities' resilience, but he warned that further long-term yield hikes could pose bigger challenges for stocks. He expects yields to settle in the 5% to 6% range unless a major recession forces the Fed to cut rates to zero.
Amid the broader market struggles, Palantir Technologies saw a 2% boost after Goldman Sachs upgraded its shares. The firm sees growth potential as markets pivot towards sovereign AI and bespoke applications.
Bitcoin mining stocks weren't spared either. The cryptocurrency's value dipped during the market sell-off, with OpenAI's revenue miss compounding the sector's issues. Hybrid miners like Cipher Digital and Hut 8 plummeted 10% each, Terawulf dropped 8%, and Riot Platforms, tied to Anthropic, fell 11%. Pure-play bitcoin miners Mara Holdings and CleanSpark were down 6% and 9%, respectively.
Oil prices remained below their peak after Trump's no-attack-before-midterms statement. West Texas Intermediate crude futures rose 3.15% to $91.06 per barrel, and Brent crude futures increased by 3.48% to $103.69 per barrel.
Elsewhere, Rosenblatt started coverage on cloud provider Nebius, setting a $304 price target and a buy rating. The company is on a growth trajectory, with revenues projected to rise significantly in the coming years.
PepsiCo shares rose 2% after its third-quarter earnings beat expectations. The company posted adjusted earnings of $2.34 per share on $25.27 billion revenue, topping forecasts of $2.29 per share and $24.96 billion revenue.
Initial unemployment claims kept dropping, with the Labor Department reporting 197,000 new jobless benefits filings for the week ending October 3, a bit below the 200,000 consensus estimate. Continuing claims rose by 17,000 to 1.72 million.
Goldman Sachs also lifted Palantir to a buy rating, raising its price target to $230. The investment bank expects more government contracts and efficiency gains for the company, thanks to its shift towards sovereign AI and a more vertical supply chain.
Federal Reserve Governor Christopher Waller indicated Thursday that more interest rate hikes might be in the cards, though he didn't specify when or by how much.
