Dow holds steady as Nasdaq falls 1.24% on AI stocks, oil surge

• AI semiconductor stocks including Nvidia, AMD, Oracle, and Broadcom declined after reports on OpenAI's revenue challenges and massive financing needs, with Broadcom arranging $50 billion in funding for OpenAI.
• Oil prices surged over 3%, with Brent up 3.6% and WTI up 3.19%, driven by Middle East tensions and supply concerns; US crude has risen more than 60% this year, raising inflation fears.
• Treasury yields remained elevated near multi-year highs with the 10-year at 5.22%, while markets price in a nearly 70% probability of a December Fed rate hike according to CME's FedWatch tool.

Market Summary: Mixed Session as AI Stocks Pressure Nasdaq

Index Performance:

U.S. stocks closed mixed on Thursday, with the Nasdaq Composite falling 1.24% to 27,197.10 points, marking the steepest decline among major indexes. The S&P 500 dropped 0.46% to 7,765.70, while the Dow Jones gained 0.09% to 51,225.48.

AI Sector Sell-Off:

Technology and semiconductor stocks declined following reports of OpenAI's revenue challenges and funding concerns. Nvidia, AMD, and Oracle faced significant pressure, with semiconductor stocks particularly hard hit despite gaining over 80% year-to-date. Broadcom encountered headwinds amid reports of arranging $50 billion in financing for OpenAI. Palantir bucked the trend, rising on a Goldman Sachs upgrade citing potential from sovereign AI and customized applications demand.

Energy Markets:

Oil prices surged on Middle East tensions, with Brent crude up 3.6% and West Texas Intermediate gaining 3.19%. Supply disruption concerns in the Strait of Hormuz and hurricane-related U.S. production cuts supported prices. U.S. crude has risen over 60% year-to-date due to Iran-related conflicts. President Trump's statement ruling out attacks on Iran before midterm elections helped prices retreat from session highs.

Fixed Income:

Treasury yields remained elevated, with the 10-year yield falling 7 basis points to 5.22% and the 30-year yield dropping 13 basis points to 5.60%. Higher energy prices fueled inflation concerns, impacting Fed rate expectations.

Fed Outlook:

Markets anticipate unchanged rates this month, with nearly 70% probability of a December rate hike according to CME's FedWatch tool.

Corporate News:

PepsiCo beat earnings despite lowering full-year guidance. Starbucks faced acquisition speculation.