US stocks fell on Thursday as rising oil prices, higher bond yields, and technology earnings weighed on trading. The Nasdaq led losses as Alphabet and Tesla shares dropped sharply.
Brent crude crossed $100 per barrel after attacks on Saudi oil tankers raised fresh supply concerns. Energy shares gained, but the broader market moved lower amid renewed inflation fears.
The Dow Jones Industrial Average fell about 500 points during morning trading. The S&P 500 lost nearly 1%, while the Nasdaq Composite dropped around 1.7%.
Selling pushed the major indexes to multi-week lows. Declining shares outnumbered advancing stocks on both the New York Stock Exchange and Nasdaq.
The CBOE Volatility Index rose to 18.79 after three straight declines. Market pressure spread across technology, communication services, consumer shares, and other rate-sensitive sectors.
Chip shares showed uneven moves. Texas Instruments fell 3.2% despite forecasting quarterly revenue above estimates. Investors continued watching the sector after recent volatility. Trading stayed defensive across sectors through midday.
Brent crude futures rose 6.7% to $100.37 per barrel during European trading. West Texas Intermediate gained 5.5% to $91.91 per barrel.
Prices climbed after Houthi forces said they attacked two Saudi tankers near the Bab el-Mandeb Strait. The group also declared a blockade on Saudi oil shipments.
The attacks raised concern about another major shipping route after months of tension around the Strait of Hormuz. Longer routes could delay deliveries and raise transport costs.
Higher oil prices also pushed Treasury yields upward. The 10-year yield reached its highest level since January 2025, while the two-year yield hit a 17-month high.
Alphabet shares fell more than 6% after the company raised its 2026 capital spending forecast. Investors focused on costs tied to artificial intelligence infrastructure.
AJ Bell investment director Russ Mould said there was a “healthy degree of scepticism” about returns from such spending. Alphabet’s decline pulled communication services stocks lower.
Tesla shares dropped more than 12% after reporting negative quarterly free cash flow. The company also recorded higher operating expenses compared with its revenue growth.
Tesla Chief Executive Elon Musk called 2026 a “massive capex year.” Spending plans include robots, data centers, manufacturing projects, and its robotaxi business.
Energy companies moved higher as oil prices extended a five-day rally. Exxon Mobil gained 1.6%, while Chevron rose 1.9%.
Diamondback Energy, Devon Energy, ConocoPhillips, and Occidental Petroleum gained between 1.7% and 2.7%. Refiners also advanced during the session.
Valero Energy, Marathon Petroleum, and Phillips 66 rose between 1.1% and 1.3%. Higher crude prices supported producers, although refiners faced changing input costs.
Analysts also watched shipping activity in the Middle East. UBS analyst Giovanni Staunovo said subdued vessel traffic could slow the region’s production recovery.
The oil rally renewed concern that higher fuel costs could keep inflation elevated. Traders increased bets on a Federal Reserve rate increase at the July meeting.
CME FedWatch data showed markets pricing a 38% chance of a quarter-point increase. That figure stood near 12% one week earlier.
New labor data also supported expectations that the Fed could keep policy tight. Initial unemployment claims fell to 187,000, below forecasts of 210,000.
Airline shares faced pressure as higher fuel costs threatened operating expenses. Transport stocks moved lower while energy producers outperformed the broader market.
Elsewhere, Lockheed Martin shares rose after the company lifted its 2026 forecasts. ServiceNow gained after raising its annual subscription revenue outlook.
Markets will likely remain focused on oil prices, upcoming inflation data, and the Federal Reserve's next policy decision for direction.
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