U.S. equities slide amid soaring oil prices and AI spending worries after Alphabet’s earnings warning

The S&P 500 declined 1.49%, the Dow fell 1.11%, and the Nasdaq 100 dropped 2.26% in Thursday’s session. September E-mini S&P futures were down 1.50%, while September E-mini Nasdaq futures slipped 2.23%.

Markets tumbled as a surge in crude oil prices combined with a sharp drop in Alphabet stock—down 7% after its post‑market earnings—fueled investor concern. Alphabet lifted its full‑year capital‑expenditure guidance to $205 billion from $190 billion, more than double its 2025 plan, prompting worries about returns on massive AI investments. Tesla shares plunged 14% following its late‑Wednesday earnings, which also highlighted a rapid increase in spending and renewed questions about Elon Musk’s pivot toward AI and robotics.

WTI crude for September (CLU26) jumped more than 6% after Houthi militants, backed by Iran, struck two Saudi oil tankers in the Red Sea, widening supply concerns beyond the Strait of Hormuz. Brent crude for September (CBU26) rose above $100 a barrel for the first time since May. President Trump, holding Iran responsible, told Axios he is weighing a “massive attack” that would be “bigger than ever before” and that he is “close to making a decision on it.”

The Houthis have threatened to block Saudi‑linked vessels and cautioned shipping firms against using Saudi ports. This jeopardizes crude exports from Yanbu, a Red‑Sea hub that Saudi Arabia has leaned on as traffic through the Strait of Hormuz has dwindled. Meanwhile, the U.S. and Iran continued a twelfth day of reciprocal strikes, while the United States maintained a blockade on Iranian oil shipments in the Persian Gulf.

Initial weekly unemployment claims for the week ending July 18 dropped 22,000 to 187,000, beating expectations for a rise to 210,000 and underscoring a resilient labor market. Continuing claims fell 2,000 to 1.796 million, also surpassing the forecast of 1.809 million.

The Chicago Fed’s June National Activity Index edged up to –0.02, falling short of the projected rise to zero and marking a modest slowdown from May’s revised –0.19.

The Kansas City Fed’s July manufacturing activity index slipped 2 points to 9, missing a forecast for a one‑point gain to 12.

Strong second‑quarter earnings, now hitting the market, remain a bullish catalyst for equities. Bloomberg Intelligence forecasts a 23% rise in Q2 earnings, comparable to Q1’s 30% surge and well above the 12% consensus. AI‑related spending is expected to drive most of this growth, with AI infrastructure stocks contributing roughly 60% of the S&P 500’s EPS expansion this quarter. To date, 89% of reporting S&P 500 companies have exceeded analyst estimates, according to Bloomberg data.

Markets price in a 36% probability of a 25‑basis‑point rate increase at the Federal Open Market Committee’s next meeting on July 28‑29.

Overseas markets finished mixed: the Euro Stoxx 50 fell 1.69%, while China’s Shanghai Composite rose 0.25% and Japan’s Nikkei 225 climbed 0.46%.

Interest Rates

September 10‑year Treasury notes (ZNU6) fell 9.5 ticks, pushing the 10‑year yield up 4.5 bp to 4.699%. The note hit a 1.5‑year low in futures, while the yield touched a 1.5‑year high. The sharp 6% jump in WTI crude heightened inflation concerns, though 10‑year breakeven inflation expectations slipped 1.7 bp to 2.265%.

Treasury prices were also pressured by the robust unemployment‑claims data, which signaled a tighter labor market, and by weak demand at the $21 billion 10‑year TIPS auction, where yields came in 2 bp above expectations.

European sovereign yields climbed, with the German 10‑year bund up 3.2 bp at 3.203%, marking a 15‑year high, and the UK 10‑year gilt rising 6.8 bp to 5.102%, its highest level in two months.

The European Central Bank kept its key deposit rate at 2.25% during Thursday’s meeting, as expected, citing a need for more data before deciding on further hikes. ECB President Christine Lagarde warned that “Risks to the inflation outlook are to the upside.” Markets now price a 92% chance of a 25‑basis‑point ECB rate increase at the next policy gathering on September 10.

US Stock Movers

Sharp drops in Alphabet (GOOGL) – down 7% – and Tesla (TSLA) – down 14% – weighed on the broader tech sector. All of the remaining “Magnificent Seven” logged declines, with Amazon (AMZN) off more than 4% and Meta Platforms (META) down over 3%.

Software names lagged, as Atlassian (TEAM) fell more than 6% and Oracle (ORCL) declined over 4%. Salesforce (CRM), ServiceNow (NOW) and Workday (WDAY) all closed lower by more than 3%.

Semiconductor makers mostly slid, with Microchip Technology (MCHP) down over 4% and Texas Instruments (TXN) off more than 3%. GlobalFoundaries (GFS), Qualcomm (QCOM), Align Technology (ALGN), ON Semiconductor (ON), Intel (INTC) and AMD (AMD) all finished lower by at least 2%.

Energy producers and related service firms rose on the oil rally, with ExxonMobil (XOM), Diamondback Energy (FANG) and ConocoPhillips (COP) each gaining more than 1%.

American Airlines (AAL) dropped over 8% after trimming its annual guidance and warning of a possible Q3 loss driven by high fuel costs.

T‑Mobile (TMUS) slid more than 10% following a disappointing earnings display.

Comcast (CMCSA) lost over 6% as Q2 results revealed a decline in broadband subscribers, even though the firm offered a brighter forecast for its Peacock streaming service.

Earnings Reports(7/24/2026)

Booz Allen Hamilton Holding Co (BAH), Liberty Global Ltd (LBTYA), Verizon Communications Inc (VZ), First Hawaiian Inc (FHB), HCA Healthcare Inc (HCA), Gentex Corp (GNTX), American Express Co (AXP), Ensign Group Inc/The (ENSG), Charter Communications Inc (CHTR), SLB Ltd (SLB), NextEra Energy Inc (NEE), Lamb Weston Holdings Inc (LW)

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