U.S. Stocks Open Lower on AI Spending and $100 Oil: Major Indices Drop, Dow Plunges Over 600 Points

Major U.S. stock indices opened lower on Thursday (23rd), with the Dow Jones Industrial Average briefly plunging over 600 points at the market open. After Alphabet and Tesla released their earnings reports, markets once again questioned whether large tech companies' massive investments in artificial intelligence (AI) would translate into proportional profits. Meanwhile, escalating U.S.-Iran tensions heightened fears of energy supply disruptions, pushing Brent crude oil above $100 per barrel, reigniting inflation and rate hike concerns, dragging both stocks and bonds lower. Alphabet and Tesla shares both declined.

As of press time, the Dow Jones Industrial Average was down nearly 350 points, or 0.7%; the Nasdaq Composite Index was down over 400 points, or nearly 1.6%; the S&P 500 Index was down nearly 0.8%; and the Philadelphia Semiconductor Index fell nearly 0.4%. TSMC ADR dropped nearly 0.7%.

U.S. stock index futures declined on Thursday as Alphabet's earnings report reignited market concerns over rapidly expanding AI-related capital expenditures. Rising oil prices and bond yields due to escalating Middle East tensions further cooled investor risk appetite.

Nasdaq 100 futures fell 1.2%, and S&P 500 futures dropped 0.8%. Alphabet, Google's parent company, plunged about 5% in pre-market trading despite strong financial results. The company raised its 2026 capital expenditure forecast from a previous high of $190 billion to up to $205 billion—more than double its 2025 spending—prompting renewed market skepticism about whether cloud giants' massive AI investments will generate sufficient returns to justify such high outlays.

Tesla shares fell over 7% in pre-market trading. Despite strong electric vehicle business performance, surging expenses dragged down profits and turned free cash flow negative, marking the first cash burn in two years.

Rising oil prices added further pressure on markets. The Red Sea emerged as a new hotspot disrupting Middle East shipping, with Brent crude rising for a fifth consecutive session, breaking above $99 per barrel. Rising energy prices reignited inflation fears, pushing U.S. Treasury yields higher across the board. Traders raised the odds of a Fed rate hike next week to nearly 40%. A sharp drop in U.S. initial jobless claims also signaled labor market resilience, further fueling rate hike bets.

European bond markets also came under pressure, with Germany's 10-year bond yield hitting its highest level since 2011. The European Central Bank (ECB) held interest rates steady on Thursday and warned that the full impact of energy shocks on inflation has yet to materialize.

Europe's Stoxx 600 Index fell 1%, with STMicroelectronics and Nestlé sold off due to disappointing earnings. Asian chip stocks rose on expectations of increased AI spending by major cloud providers, but U.S. peers showed mixed performance. Texas Instruments' earnings failed to meet investor expectations, particularly as the stock had already surged nearly 70% year-to-date. Markets now await Intel's after-hours earnings report to gauge the latest chip demand.

Juliette Cohen, portfolio strategist at CPR Asset Management, said that while equities initially shrugged off July's oil rebound, market sentiment is shifting. With oil prices and bond yields accelerating higher, and UK and French yields breaching key levels, high borrowing costs and energy prices are beginning to pressure equities.

As of around 9:00 PM Taipei time on Thursday (23rd):

- Dow Jones Industrial Average: Down 541.97 points (1.04%), at 51,676.61 - Nasdaq Composite Index: Down 442.15 points (1.72%), at 25,248.76 - S&P 500 Index: Down 75.62 points (1.01%), at 7,423.34 - Philadelphia Semiconductor Index: Down 103.51 points (0.83%), at 12,307.15 - TSMC ADR: Down 1.17% to $416.20 per share - 10-year U.S. Treasury yield: Up to 4.711% - NY Light Crude: Up 4.66% to $90.88 per barrel - Brent Crude: Up 2.32% to $86.83 per barrel - Gold: Down 2.37% to $4,053.40 per ounce - U.S. Dollar Index: Up to 101.377

Key Stocks:

- Tesla (TSLA-US): Early trading down 9.90% to $337.00 per share Tesla fell nearly 6% pre-market. The company's Q2 profit missed expectations, and negative free cash flow amid margin pressure raised investor concerns about profitability and cash flow.

- Alphabet (GOOGL-US): Early trading down 5.74% to $322.47 per share Alphabet fell 4.5% pre-market. The Google parent company raised its full-year capital expenditure outlook to strengthen AI capabilities, forecasting 2026 spending between $195 billion and $205 billion, up from a prior high of $190 billion, intensifying market concerns over rising AI investment costs.

- Lockheed Martin (LMT-US): Early trading up 6.79% to $549.26 per share Lockheed Martin rose 6% pre-market. The defense giant reported Q2 revenue and earnings above expectations—$7.94 EPS on $20.06 billion in revenue, exceeding analyst estimates of $7.19 and $19.34 billion. The company also raised its full-year earnings outlook, boosting the stock.

Today's Key Economic Data:

- U.S. Initial Jobless Claims (prior week): 187,000 (expected 211,000, prior 209,000) - U.S. Continuing Claims (prior week): 1.796 million (expected 1.80 million, prior 1.788 million)

Wall Street Analysis:

With escalating Iran conflict, global financial markets are at the center of severe volatility. Soaring energy prices are directly transmitting to bond markets, pushing the U.S. 10-year Treasury yield to 4.7%, while the 30-year yield remains above 5% long-term.

Truist Advisory analysts noted that "oil prices are now pulling rates higher," complicating the Fed's decision-making. While a rate hike isn't certain, the direction of risks is clearly unfavorable for markets.