Wall Street suffered its sharpest one-day decline in a month on Thursday, driven by a dual shock: disappointing earnings from two of the “Magnificent Seven” tech stocks and a surge in oil prices above $100 a barrel for the first time since May. The Nasdaq Composite fell 2.15%, the S&P 500 lost 1.21%, and the Dow Jones Industrial Average shed 0.97%. Brent crude settled at $99.67, briefly touching $100 after Houthi rebels struck two Saudi oil tankers in the Red Sea, prompting US President Donald Trump to threaten “major military punishment” against Iran and the Houthis. The yield on the 10-year US Treasury note rose to its highest since early 2025, reflecting renewed inflation fears.

The mechanism behind the sell-off was twofold. First, investors punished Google parent Alphabet and Tesla for delivering what analysts in New York described as “great numbers but a bad story.” Alphabet fell 7% after it raised its 2026 capital expenditure forecast to as much as $205bn, mostly for AI infrastructure, while reporting negative free cash flow. Tesla tumbled 14.5% after its second-quarter profit missed estimates and the company posted its first negative free cash flow in over two years. The broad-based rotation out of tech and communication services—the two worst-performing S&P 500 sectors, down 5.2% and 5.1% respectively—mirrored a shift into industrials, defence, and energy, where Lockheed Martin and RTX rose on upgraded forecasts.

From Washington, the geopolitical dimension compounded market stress. US air strikes against Iran and Iranian retaliatory fire at bases in neighbouring Arab states raised the risk of a wider conflict, while the Houthi attack on Saudi tankers threatened the Bab al-Mandeb strait, a chokepoint for global oil flows. Analysts in London noted that the Brent surge came just days before the Federal Reserve’s next policy meeting, with traders pricing in a 64% probability of no rate change. Matt Miskin of Manulife John Hancock Investments, cited by multiple reports, warned that oil rising at this clip posed “a meaningful macro and market risk” and that low unemployment data would pressure the Fed to focus on inflation.

The next milestone to watch is the Federal Reserve’s interest-rate decision, due next week. Market participants will also monitor further earnings from Intel and other chipmakers, as well as any additional Houthi attacks that could push oil even higher. The CBOE Volatility Index, Wall Street’s fear gauge, climbed to a nearly one-month high of 20.3 before settling at 18.7, indicating that investors expect volatility to persist.