AI sell-off resumes on Wall Street as Brent climbs to nearly $110 on Hormuz attacks

• US: The Nasdaq Composite ended 2.15% lower at 26,140.03, leaving it 5.71% below its 52-week high and down 4.06% over five sessions. The S&P 500 lost 1.09% to 7,659.44, and the Dow held up better, slipping 0.34% to 52,002.41. US futures are the only live read now: S&P 500 futures are 1.13% lower and Nasdaq 100 futures 2.49% lower.
• Europe closed before the worst of the US slide and finished higher. The FTSE 100 gained 0.38% to 10,881.9, within 1% of its 52-week high. The DAX rose 0.95%, the Euro Stoxx 50 0.58% and the CAC 40 0.28%.
• Asia was settling up after Thursday's chip rout, when a slump in memory-chip makers set off a circuit breaker in Seoul. The Kospi closed Friday at 5,668.05, the Nikkei at 65,324.29 and the Hang Seng at 24,186.83.

AI was the main story again. The selling came from worries about how the AI build-out is being paid for. Highly indebted data-centre operators were hit hardest, and software and chip stocks fell together. The doubts start with Chinese memory-chip competition and higher borrowing costs. Companies spending heavily on AI rely on cheap debt, and a 10-year Treasury yield around 5.1% makes that debt expensive. It also lowers the present value of the future profits that justify high tech valuations.

This week's hotter-than-expected inflation report added to the pressure. Markets now price about one more quarter-point Fed rise by December. Chair Kevin Warsh gave no new signal when he spoke on Friday, so the Fed offered no relief. Treasuries were almost unchanged on the day, which suggests the fall in equities was about specific sectors rather than a fresh move in rates.

Oil supplied the second shock. Brent rose 3.64% to $109.78 and WTI 1.02% to $98.97 after further Iranian attacks on shipping around the Strait of Hormuz. With no US-Iran deal in sight, traders are paying a war-risk premium. Higher oil feeds straight back into the inflation worry, which hurts long-duration tech stocks again. That helps explain why energy rose while chips fell. Europe's gains were narrower than the US losses, and we found no single clear catalyst for them.

Fear rose quickly in equities but not in bonds. The VIX jumped 21.45% to 19.99, while the MOVE index of bond-market volatility eased 1.35% to 101.1. Sector moves show rotation rather than across-the-board selling. Energy rose 2.52%, utilities 1.34% and consumer staples 1.08%, while technology fell 3.02% and communication services 1.89%. Safe havens gave only a modest bid: gold rose 0.44% and the dollar index slipped 0.2%. In Europe, PrimerIQ's own breadth count showed 2,285 risers against 1,381 fallers, a clearly positive session.

No major US economic data was released today, so the moves were driven by news and positioning. The key data point remains Wednesday's consumer price report, which came in hotter than expected and raised the odds of further Fed tightening. Policymakers did not change the outlook on Friday. Chair Warsh declined to preview the next decision. Nothing of consequence is left on today's calendar. The next test is the Fed's 27–28 October meeting, followed by the PCE inflation report, the Fed's preferred inflation measure, on 29 October.

Regional bank results were mixed. Truist reported earnings per share of $0.56, a 53.8% miss. The figure was cut by a roughly $1.4bn loss on repositioning its bond portfolio, and adjusted EPS of $1.16 was still slightly below forecasts. Regions beat, with EPS of $0.73 against expectations of about $0.66. We have found no significant after-hours results so far tonight.