Oil prices, AI slowdown drag US stocks lower; Tesla loses $200 billion

US stock markets declined Friday as escalating Middle East conflict pushed oil prices above $100 per barrel and investors cooled on artificial intelligence investments. The Dow Jones Industrial Average fell 0.97%, the S&P 500 dropped 1.21%, and the Nasdaq Composite slid 2.15%.

Concerns over potential disruptions to oil tanker transport in the Strait of Hormuz and the Red Sea fueled uncertainty, with the 10-year Treasury yield climbing to a 1.5-year high of 4.7%. Investors are closely watching the geopolitical situation, which adds another layer of risk to the market.

Tech stocks faced pressure. Alphabet, Google's parent company, saw its shares drop 6.89% despite strong results in search and cloud computing, as investors focused on the company's increased AI spending. Tesla's stock plummeted 14.52% after its second-quarter earnings report revealed weaker-than-expected revenue and negative cash flow, erasing approximately $200 billion from its market capitalization.

Other major tech companies also experienced declines. Meta, Amazon, and Nvidia fell 3.36%, 4.57%, and 1.56% respectively, amid broader investor concerns about escalating AI expenditures. However, chipmaker Intel bucked the trend, with its shares rising 11% in after-hours trading after reporting earnings and revenue that significantly surpassed analyst expectations. Intel closed down 2.33% for the regular session.