U.S. markets faced a downturn on Thursday, driven by declines in AI chip stocks, despite strong earnings reports from several companies. The S&P 500 dropped 1.8%, erasing all gains from the previous day, while the Dow Jones Industrial Average fell 403 points and the Nasdaq composite lost 3%. The sell-off was led by Nvidia, which fell 4.1%, and Advanced Micro Devices, which tumbled 10.7%. CoreWeave, a cloud-based AI chip provider, also dropped 6.8%. Concerns about potential moratoriums on data center construction following the U.S. midterm elections added to the pressure.
Globally, South Korea’s Kospi index plummeted 5.3%, reflecting broader worries about the AI sector. However, other markets showed signs of recovery. Oil prices rebounded, with Brent crude rising 2.3% to $96.76 per barrel, partially recovering from a nearly 9% drop the day before. The 10-year Treasury yield edged down to 4.89%, down from 4.90% the previous day, as uncertainty about the Iran war and its impact on global energy markets persisted.
Despite the market volatility, some companies reported strong earnings. AppLovin surged 29.9% after beating revenue and profit expectations and announcing a $3.2 billion stock buyback program. Tapestry, the parent company of Coach and Kate Spade, rallied 9.8% after delivering better-than-expected profits and raising its revenue and earnings forecasts for the fiscal year. These positive reports helped support gains in the broader market.
In Europe, stock indexes rose, with London’s FTSE 100 gaining 0.6% after the Bank of England raised its main interest rate for the first time in three years to combat inflation. Bank Governor Andrew Bailey emphasized the importance of resolving the conflict in the Middle East to stabilize oil prices and inflation.