AI Stocks Slide Again as Brent Crude Tops $110 a Barrel

what happened

A rebound in artificial intelligence stocks ran out of steam, while oil climbed back above $110 a barrel as investors again moved away from risk. According to Dow Jones Newswires, Nasdaq futures fell 0.3% after the index had gained more than 1% on Monday. Shares of AI infrastructure companies came under pressure in Asia and Europe, with South Korean data-center startup Elice dropping as much as 33% on its market debut and Swiss engineering group ABB losing over 6% despite raising its full-year guidance.

Front-month Brent futures topped $110 and are on course for their highest close since May 19, as supply risks in the Middle East grow. Analysts at ANZ point to a sharp rise in attacks on ships in the Persian Gulf. Treasurys, however, strengthened: the 10-year yield dipped below 5.120%, while the 30-year yield hovered near 5.455%.

According to LSEG, traders now price a 92.8% chance that the Federal Reserve holds rates at its October meeting, with bets on a hike pulled back significantly. The dollar weakened, bitcoin fell 0.7% to $81,332, and New York gold slipped below $4,150 a troy ounce.

why it matters

Expensive oil layered on top of a selloff in technology stocks weighs on risk appetite, since higher energy costs lift inflation expectations and reduce the odds of monetary easing. Bonds gaining at the same time points to a search for safety rather than strong growth. Earnings from Netflix, United Airlines and General Motors in the coming days will be the next test for the market.

market impact

Oil and AI stocks: higher energy prices and Middle East risks weigh on risk appetite

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