Nasdaq suffers its worst day since June as AI spending fears and $113 oil rattle Wall Street

Wall Street had a rough Thursday. The Nasdaq composite, home to many of the biggest tech names, sank 2.6% for its worst day since June 23. The S&P 500 lost 1.2%, its steepest drop since late July. The Dow Jones Industrial Average barely moved and finished up about 0.02%.

Two worries hit at once. Investors are growing uneasy that the huge sums tech companies keep pouring into artificial intelligence may never pay off. At the same time oil prices jumped on fears that the fighting with Iran could soon flare up again.

The pain was mostly in tech. Most U.S. stocks actually ended the day higher, but the slide in the AI giants was heavy enough to pull the big indexes down. The selling had started in Asia overnight. South Korea's Kospi fell 3.5% while Hong Kong's Hang Seng gave up 3% and Japan's Nikkei 225 lost 2.7%.

Meta and Tesla set the tone

Meta fell about 7% after its quarterly report on Wednesday. Sales beat forecasts but profit came up short. The company warned that it expects to spend even more next year to keep up with demand for computing power. A filing also showed plans for an extra $825 billion in contracts tied to its AI build-out along with a new class of stock to help pay for it.

Tesla dropped about 2%. The carmaker earned more than expected over the summer but brought in less revenue than analysts wanted. It also pulled back on its capital spending plans, which let down investors who were hoping for faster expansion.

Nvidia CEO Jensen Huang added to the gloom. In a TV interview he said the money needed to fund the AI boom is getting "scarce" because of higher interest rates and a mountain of existing spending commitments.

Chip stocks took some of the hardest hits. Nvidia, the most valuable company on Wall Street, was the biggest drag on the S&P 500. Chip equipment maker Lam Research and cloud computing firm CoreWeave also fell sharply.

Oil climbs on Iran fears

Brent crude, the global benchmark, rose nearly 4% to about $113 a barrel, its highest price since May. U.S. crude gained more than 2% to settle above $99.

The jump followed reports that the United States and Israel are preparing for possible strikes on Iran after the Nov. 3 midterm elections. Iranian state TV also said seven oil tankers were hit or ran into mines in and near the Strait of Hormuz overnight. If confirmed, that would be the most ships damaged in a single day since the war began on Feb. 28.

Henry Allen, a macro strategist at Deutsche Bank, told clients it had been "another difficult 24 hours for markets" as investors sorted through AI growth worries, pricier oil and stress over government debt.

Money runs to bonds

Nervous investors moved cash into U.S. government bonds. The yield on the 10-year Treasury note slipped below 5% for the first time since late September. Its drop of nearly 0.2 percentage point was the biggest one-day fall in more than three years.

The price tag for AI is enormous. The Brookings Institution estimates that building out AI infrastructure from 2025 through 2032 will cost more than $10 trillion. That would be the largest wave of investment in U.S. history. Analysts note that spending is running far ahead of the cash these companies bring in, so they lean on stock and debt markets to keep paying the bills.

There is some perspective. The S&P 500 is still close to the record highs it reached earlier this month. Hedge funds have also piled up bets against stocks to near a five-year high, which some analysts say could spark a fast rally if the market turns.

The timing matters in an election season. A longer slide before Election Day could hurt Republicans because President Donald Trump often points to rising stocks as proof that his economic plan is working.