A significant sell-off swept US equity markets on Thursday after earnings from Alphabet and Tesla renewed investor concerns about the rising costs of AI development. The situation was exacerbated by a surge in Brent crude above $100 amid Middle Eastern tensions, which revived inflation fears.
Index moves and tech pressure
The Nasdaq fell to a more-than two-month low and was already over 7 percent below its early-June record high. The S&P 500 and the Dow Jones touched one-month lows during the first half of trading on Thursday. Technology stocks were under particular pressure: shares of Alphabet fell 7.3 percent after the Google parent increased its capital expenditure plans and reported negative free cash flow for the first time in its history. Markets interpreted this as a sign that financing AI development is becoming a bigger burden.
Tesla also suffered: the electric-vehicle maker's shares plunged 12.2 percent after it reported negative free cash flow in the second quarter for the first time in more than two years. Those two reports brought back a central question that has occupied markets for months: will the large investments pouring into AI generate the returns needed to justify the high valuations of tech stocks?
Domestic effects and other sectors
The turbulence on global markets affected Hungary as well: the BUX declined on Thursday, OTP fell, and among the blue chips only Mol gained.
Chipmakers also struggled: Texas Instruments shares fell 3.1 percent despite the company issuing revenue guidance that beat expectations. There were, however, notable exceptions: Lockheed Martin shares rose more than 10 percent after the defense contractor raised its 2026 sales and profit outlook, and Thermo Fisher Scientific gained nearly 10 percent after improving its annual profit forecast.
Geopolitics, oil and Fed outlook
Market sentiment worsened further as tensions in the Middle East escalated. Houthi fighters attacked two Saudi oil tankers in the Red Sea, and US President Donald Trump threatened “significant military retaliation” against Iran and the Houthis. Investors fear the conflict could threaten global oil shipments; Brent crude responded with a rise of more than 6 percent, crossing the $100-per-barrel level for the first time since late May.
The oil price increase renewed inflation worries: short-term US Treasury yields rose to a 17-month high. Investors reassessed the odds of a Federal Reserve rate hike at next week’s meeting: according to CME FedWatch, the probability of a 25 basis-point increase had been priced at 12 percent a week earlier, but by Thursday that chance had risen to 36 percent.
Fresh US labor-market data did not ease pressure on the central bank. Initial claims for unemployment benefits fell by more than expected, indicating a still-tight labor market and leaving the Fed’s primary focus on bringing down inflation.
Volatility and the big picture
The CBOE Volatility Index (VIX), Wall Street’s so-called fear gauge, climbed to nearly a one-month high. Declining issues outnumbered advancing ones by more than three to one on both the New York Stock Exchange and the Nasdaq, pointing to a broad-based selling wave.
In sum, tech earnings, the jump in oil prices and geopolitical tensions combined to sour investor sentiment, prompting rapid market repricing and increasing uncertainty about the Federal Reserve’s next steps.
