Wall Street ended mixed on Thursday, with technology shares dragging the Nasdaq and S&P 500 lower while the Dow Jones Industrial Average managed a small gain. Two forces drove the action: a sharp sell-off in semiconductor stocks after a report that OpenAI’s revenue is running well below earlier signals, and a jump in crude oil prices that revived worries about inflation and further Federal Reserve rate hikes.
What Moved Markets
The Dow Jones Industrial Average rose 64.40 points, or 0.13%, to close at 51,244.27. The S&P 500 fell 36.41 points, or 0.47%, to 7,765.36. The Nasdaq Composite had the steepest loss, dropping 345.35 points, or 1.25%, to 27,193.34. That came just two days after the Nasdaq hit a record closing high.
Chipmakers, which have climbed more than 80% so far this year, were the clear laggards. A Financial Times report said OpenAI’s annualized revenue is $20 billion lower than the company had previously signaled, which raised questions about how much money will keep flowing into AI spending. Concerns also lingered after a Wall Street Journal report that Broadcom is lining up $50 billion in financing for OpenAI, with Oracle also seeking funds. Investors worry that heavy borrowing by tech companies could compete for capital. Both Broadcom and Oracle closed lower.
Oil added to the pressure. Front-month WTI crude settled up 3.6% and Brent rose 4.1%, helped by attacks on shipping in the Strait of Hormuz and a cut in US output tied to hurricane activity. US crude is up more than 60% this year amid the conflict involving Iran. Higher energy costs tend to push inflation up, and the Fed raised rates in September for the first time since July 2023. Treasury yields stayed near multi-year highs, with the 2-year yield, which reflects rate expectations, rising more noticeably. Markets expect the Fed to hold rates steady at its next meeting, but futures pricing shows a probability near 70% of a hike in December. Fed Governor Christopher Waller said more hikes will probably be necessary, though the timing is flexible.
Notable Movers
PepsiCo (PEP) rose after the company said it would pursue additional spending cuts, even as it lowered its annual core profit forecast. Investors appeared to welcome the cost discipline.
Chipotle Mexican Grill (CMG) jumped on reports that Starbucks is exploring a purchase of the burrito chain. No deal has been announced, so the move reflects speculation.
Starbucks (SBUX) dipped on the same reports, as investors weighed what an acquisition might cost.
Palantir Technologies (PLTR) climbed after Goldman Sachs upgraded the data analytics company to “buy” from “neutral.”
Broadcom (AVGO) and Oracle (ORCL) both finished lower on concerns about the scale of financing tied to OpenAI.
Looking Ahead
Investors are now turning to the third-quarter earnings season, which kicks off next week. Results and guidance from large companies will show whether profit growth can justify the market’s gains this year, especially in AI-linked stocks. Traders will also keep a close eye on oil prices, Treasury yields, and any new comments from Fed officials, since higher energy costs and rate-hike expectations have been key sources of volatility. Remember that markets can swing sharply on headlines, so a long-term plan and diversification remain important for retail investors.