Meta's AI bill sinks Nasdaq 2.6% as Treasuries rally and Brent jumps

• US: The Nasdaq Composite ended the regular session down 2.6% at 26,008.86 and the S&P 500 lost 1.21% to 7,663.43. The Dow finished flat, up 0.02% at 52,867.98, so the selling was concentrated in tech rather than spread across the market.
• Europe: The Euro Stoxx 50 fell 1.94% and the CAC 40 1.39%, while the DAX closed 1.07% lower. The FTSE 100 held up best, slipping 0.26% to 10,725.03.
• Asia: The Hang Seng took the heaviest hit, closing 3.91% lower at 22,934.68. The Nikkei 225 shed 1.82% and the Shanghai Composite 2.07%.

The main driver was investors losing patience with AI spending. After Wednesday's close Meta reported higher AI investment alongside plans for a new class of shares, and its stock slid. Chip-equipment makers fell harder: Lam Research dropped sharply despite beating forecasts, because its outlook for December disappointed. The selling started in Asia, whose indices hold a lot of chipmakers, then spread through Europe's semiconductor stocks to New York. Hong Kong had an extra problem: Beijing's push for tighter product-quality standards hit Alibaba and JD.com.

The bond market suggests this was about fears for earnings, not about interest rates. The US 10-year yield fell 19.3 basis points to 4.953% as money moved into Treasuries. Inflation expectations barely moved, so the drop reflects a search for safety rather than an improved inflation outlook. Lower yields usually help growth stocks, because their profits lie further in the future and are worth more when rates fall. The Nasdaq fell anyway, which shows how much the worry about AI spending dominated.

Oil pulled in the opposite direction. Brent rose 3.67% to $112.78, what Reuters called a five-month high, after Iran's Revolutionary Guards threatened US bases over naval escorts in the Strait of Hormuz, and amid reports of attacks on Saudi energy facilities. In Europe, euro zone banks had what Reuters described as their weakest day since March. Political strain in France pushed the gap between French and German borrowing costs to what Reuters called a 15-year high.

Fear rose but did not spike. The VIX closed 2.35 points higher at 19.03. The MOVE index of bond-market volatility jumped 11.36% to 106.84, which matters more given how far Treasuries moved. US sectors pulled sharply apart: consumer staples gained 3.31%, utilities 2.07% and health care 1.32%, while technology lost 3.29%. That is investors switching into defensive stocks, not a sell-everything day. Outside the US the selling was broader. PrimerIQ's count of Asian listings shows 9,573 fallers against 2,872 risers, and in Europe 2,373 against 1,274. Safe havens gave mixed signals. Treasuries and the yen gained, with the dollar down 0.83% at ¥156.82. But gold fell 2.7% to $4,037.90 and bitcoin dropped 3.37%, and there is no clean explanation for gold falling while oil rose.

Thursday's US weekly jobless claims fell to 194,000. That suggests layoffs remain limited despite high borrowing costs, but it also gives the Federal Reserve little reason to relax. Nothing else of consequence is due on the US calendar this evening. The next major test is the Fed's meeting on 27–28 October. Markets expect rates to be held after September's increase, and Chair Kevin Warsh has declined to say which way the committee is leaning.

Procter & Gamble beat forecasts with EPS of $2.00 against $1.89 expected, helping consumer staples lead the S&P 500. In Brussels, UCB jumped 21.64% after raising its 2026 revenue growth forecast. After the bell, Bloom Energy earned $0.94 a share against $0.56 expected and raised its full-year guidance, yet its shares slipped in extended trading. Western Digital ($4.64 vs $3.99 expected) and Newmont ($2.20 vs $1.94) also beat, and their share-price reactions were still settling as we published.