S&P 500, Dow, Nasdaq End Lower Over Capex Concerns, Surging Oil — CBRS, AMD, GOOGL, TSLA, MSTR In Focus

• The S&P 500 ended 1.2% lower, while the Nasdaq 100 slipped 2% and the Dow Jones Industrial Average ended 1% lower.
• Tesla and Alphabet stocks tanked following heightened Capex plans. 
• Brent crude prices briefly topped $100 a barrel. 

U.S. stock indices ended lower on Thursday as the U.S.-Iran war showed little sign of easing, pushing oil prices and Treasury yields higher, while investors continued to fret about returns on sky-high capital spending by Big Tech firms.

The S&P 500 ended 1.2% lower, while the Nasdaq 100 slipped 2% and the Dow Jones Industrial Average ended 1% lower. The Russell 2000, which tracks stocks with small market capitalizations, fell 0.7%.

Among ETFs tracking benchmark indexes, the SPDR S&P 500 ETF (SPY) slipped 1.2% and Invesco QQQ Trust (QQQ) ended Thursday 1.7% lower, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 1%.

Meanwhile, the VanEck Semiconductor ETF (SMH) fell relatively less, down 0.5%, aided by strength in SpaceX (SPCX) and Micron Tech (MU). The broader Vanguard Information Technology ETF (VGT) fell 0.7%, tracking weakness in Alphabet and Tesla stocks following commentary about hiking capex expenditures. 

Alphabet shares dropped about 6.7% on Thursday as its capex plans fanned investor concerns of enough AI demand to absorb the bloated hyperscaler capex costs. 

Retail sentiment on Stocktwits for SPY dropped to the ‘extremely bearish’ zone, while sentiment for QQQ was ‘bearish’ and ‘neutral’ for the DIA with ‘high’ message volumes.

US Market Drivers

Brent crude topped $100 a barrel, stoking inflation fears and driving Treasury yields to their highest levels of the year. In response to Red Sea shipping incidents, President Donald Trump stated he would hold Iran accountable for subsequent Houthi actions from Yemen, threatening escalated military responses.

According to an Axios report on Thursday, Trump indicated he is "considering a massive attack" against Iran. He described the potential action to the news outlet as "bigger than ever before," further noting, "I am close to making a decision. We are all set for it." However, the president did not specify a timeline for his final choice.

Treasury yields rose in tandem with oil prices. The 10-year yield reached its peak since January 2025, temporarily exceeding 4.7%. Short-term rates also rose, with the 2-year yield reaching a session peak of 4.37%.

“Escalating Middle East tensions have pushed crude prices higher, raising concerns that inflation could re-accelerate and delay interest-rate relief, maybe even cause the Fed to hike,” Sameer Samana at Wells Fargo Investment Institute told Bloomberg in an interview. “We think oil prices eventually normalize, but appreciate that things may get worse before they get better.” 

Intensifying conflict in the Middle-East has fueled concerns regarding elevated interest rates. With the Federal Reserve meeting just days away, money markets indicate that traders now estimate a roughly 35% probability of a rate hike, a significant increase from approximately 10% just one week prior. Furthermore, the market has fully priced in a September rate hike.

Trending Stocks To Watch 

Cerebras Systems (CBRS): Advanced Micro Devices Inc. (AMD) and Cerebras Systems Inc. (CBRS) announced a technical partnership on Thursday to deliver a new artificial intelligence inference architecture, aiming to significantly reduce response times for complex AI applications. 

Alphabet (GOOGL): Alphabet (GOOGL, GOOG) shares fell nearly 8% on Thursday morning after a string of brokerages lowered their price targets following the company’s second-quarter earnings.  

Strategy (MSTR): Strategy teamed with other cryptocurrency firms to support the Bitcoin (BTC) network amid weakness in the cryptocurrency market. 

Tesla (TSLA): Wall Street lowered price targets on Tesla Inc. (TSLA) following its second-quarter (Q2) earnings miss, with analysts broadly arguing that the company's AI investments now need to be matched by “tangible” progress in its Robotaxi rollout. 

American Airlines (AAL): The carrier warned that a surge in fuel costs tied to the conflict in Iran would weigh heavily on profits for the rest of the year.

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