The Nasdaq Composite fell 2.6%, its largest daily percentage decline since early June, while the S&P 500 dropped 1.2%. The MSCI All-World index fell 1.3%, reflecting the sell-off's broader impact across international markets. The technology-led downturn followed fresh investor concerns about the scale of spending required to develop and operate advanced AI systems.
Meta Platforms was among the companies at the centre of the reaction. Its shares fell 7% after the company reported quarterly results and outlined plans to issue non-voting shares, renewing questions about how it intends to finance its expanding AI investment programme. Although revenue exceeded expectations, investors remained focused on the financial commitments needed to support computing infrastructure and future product development.
The market response highlights a growing challenge for technology companies: demonstrating that substantial investment in AI can produce sustainable revenue and earnings. Data centres, specialised processors and other computing infrastructure require significant capital before their commercial returns become fully established. Companies may risk losing ground if they invest too little, but aggressive spending can also weaken cash generation and increase financing requirements.
Energy markets added another source of pressure. Brent crude rose about 4% to settle at $113.17 a barrel, reaching a five-month high after Houthi attacks in Saudi Arabia heightened concerns about potential disruption to Middle Eastern supplies. US West Texas Intermediate crude also advanced, settling at $99.47 a barrel.
Higher oil prices could increase transport, manufacturing and household energy costs, complicating efforts to contain inflation. If these increases persist, businesses may pass additional costs to consumers, while central banks could face renewed pressure to maintain restrictive monetary conditions.
Investors also moved towards safer assets. The benchmark US 10-year Treasury yield fell sharply as bond prices rose, reflecting demand for government debt amid market volatility.
The immediate outlook will depend on whether technology companies can demonstrate that AI expenditure is translating into stronger commercial returns and whether geopolitical tensions continue to threaten energy supplies. Earnings announcements, capital-spending guidance and developments in the Middle East are likely to remain central to market sentiment.
