The sharp rise in oil and artificial intelligence concerns weighed on Wall Street

US stock markets fell on Thursday as a sharp rise in oil prices fueled inflation and interest rate concerns. Investors were also weighed down by the results of large technology companies and new concerns about the profitability of artificial intelligence investments.

The S&P 500, which broadly tracks large companies, fell 1.2 percent. The technology-focused Nasdaq weakened by 2.2 percent. The flagship Dow Jones index fell 1.0 percent.

Oil prices rose sharply as the US-Iran conflict escalated. The price of the benchmark Brent rose six percent to $100.1 a barrel. The price of US WTI crude oil rose six percent to 91.6 dollars per barrel.

Oil prices were at their highest since the US and Iran had previously reached an agreement to end the war.

Oil was driven up by concerns about the expansion of the conflict in the Middle East. Yemen’s Iran-backed Houthi rebels said they attacked two Saudi Arabian tankers in the Red Sea. In addition, the president Donald Trump threatened to bomb Iranian infrastructure if Iran fires at ships in the Strait of Hormuz.

“From now on, whenever the Islamic Republic of Iran fires at a ship in the Strait of Hormuz with a missile, rocket, drone or any other device or weapon, the United States will bomb and destroy one bridge or power plant, including targets located in the capital city of Tehran,” Trump wrote on Truth Social.

According to Axios, Trump said later Thursday that he was considering a “massive strike” on Iran. According to him, the blow would be “bigger than ever before”, and the decision is close.

The interest rate market priced in a higher probability than before of the Fed raising interest rates. According to the CME FedWatch Tool, the market priced in an 82 percent probability that the Fed will raise interest rates in September. A week earlier, the probability was 52 percent.

According to Bloomberg, the money market saw about a 35 percent probability of an interest rate hike at the next Fed meeting, while a week earlier the probability was about 10 percent.

Technology stocks weighed down Alphabetin and Tesla’s result reactions. Google’s parent company Alphabet fell 7.1 percent, although the company’s result was stable. Investors were nervous that the company raised its 2026 capex forecast to $195 billion to $205 billion from $180 billion to $190 billion previously.

The rise in AI investments fueled concerns about how quickly tech giants will be able to turn their AI investments into profitable growth. Alphabet, Meta Platforms, Microsoft and Amazon have previously communicated that they will spend up to 725 billion dollars this year on artificial intelligence projects.

Tesla fell 14.5 percent. The electric car company reported a clear earnings disappointment for the second quarter. The company’s expenses grew faster than revenue, and both Tesla and Alphabet reported negative free cash flow in the second quarter.

Other large technology companies were also under pressure. Meta Platforms, Microsoft and Amazon fell on Thursday.

Network equipment manufacturer on the New York Stock Exchange Nokian depository receipt, or ADR, fell 5.4 percent to $9.73.