Escalating tensions in the Middle East, disruption risks to Gulf oil shipments, and a report that OpenAI’s actual revenue was running below some earlier expectations combined to drive a sharp cross-asset move on Thursday. US technology shares led the decline, crude spiked, Treasury yields swung from higher to lower, and cryptocurrencies came under pressure.
Oil jumps as Middle East tensions intensify
The oil market was pulled back into a geopolitically driven surge in volatility. Reports said Donald Trump was considering a new strike on Iran before the midterm elections. Xinhua said Iran-backed Houthi forces attacked two airports in Saudi Arabia, killing three people, and the Saudi-led coalition then said it had destroyed 82 Houthi targets in Yemen. The UK Maritime Trade Operations office said a tanker was hit by multiple projectiles off the northwestern coast of Qatar, causing casualties.
Shipping data added to the picture. Iran expanded attacks from the Strait of Hormuz to the Persian Gulf and the Gulf of Oman. Data from Belgian research firm Kpler showed that only seven tankers passed through the Strait of Hormuz on Oct. 6, the lowest count since July 23.
Another disruption came from Hurricane Isaias in the US Gulf of Mexico. Shell, Chevron and other companies cut offshore production, while refinery operations also faced possible disruptions. Against that backdrop, WTI crude futures were up more than 4% at one point, and Brent physical prices, a benchmark for physical oil, approached wartime highs. Refined products also rose again, with diesel prices surging this week.
Trump later wrote on social media, 「We are having productive discussions with the Islamic Republic of Iran... We will not attack Iran at any time before the midterm elections.」 Oil briefly sold off and gave back part of the move. But Axios reported that Iranian officials remained deeply skeptical of Trump’s statement and feared a third surprise strike, leaving oil off its intraday highs but not down on the day.
Arne Lohmann Rasmussen, chief analyst at Global Risk Management, said: 「The whole narrative that traffic through the Strait of Hormuz has recovered has been completely overturned.」
Saudi Aramco CEO Amin Nasser warned: 「The supply elasticity buffer has become worryingly thin. If disruptions persist, they will weigh on economic growth and push up inflation.」
In shipping, daily charter rates for very large crude carriers hauling oil from the Middle East to China reached $1.4 million, a record high.
OpenAI revenue gap weighs on the AI complex
US stocks closed mixed on Thursday. The S&P 500 fell 0.47% to 7,765.36, the Nasdaq Composite dropped 1.25% to 27,193.34, the Dow Jones Industrial Average rose 0.10% to 51,231.64, and the Russell 2000 added 0.03%. Earlier, the Nasdaq 100 had fallen 1.4% in its worst session since July.
The main drag came from technology. According to the report cited in the source material, OpenAI’s annualized revenue based on current performance was about $50 billion, versus nearly $70 billion expected in some earlier media reports, a gap of roughly $20 billion. That revived questions around the payoff from AI investment and pushed a semiconductor stock index down 3.4% in a single session.
The selling spread across the AI chain. Nvidia fell about 3%. Oracle dropped more than 5.5%, with the source putting the move at 5.58%. Micron Technology fell 4.79%. AMD, Broadcom, Intel and Super Micro Computer all declined between 4% and 6%.
Data center and optical communications names were hit harder, with the group down about 7%. Cloud companies Nebius and CoreWeave each fell more than 7%. Applied Optoelectronics slumped 13%, while Coherent lost 9.62%.
Goldman Sachs’ trading desk also pointed to extra pressure points for AI-related names: disappointing results from Samsung and Taiwan Semiconductor Manufacturing Co. relative to elevated expectations, and reports that key AI players including Oracle and Broadcom planned further bond-market financing, adding to capital pressure.
Matt Maley of Miller Tabak said: 「Investors are starting to question how long this enormous level of AI spending can be sustained when borrowing costs have risen so sharply.」
Ulrike Hoffmann-Burchardi, chief investment office at UBS Wealth Management, said in a recent report that she still sees a structural opportunity in AI, while stressing diversification. She wrote: 「With higher yields lifting the cost of capital, ongoing questions around returns, AI safety, financing and execution can all trigger bouts of volatility.」
Within the S&P 500, six of the 11 sectors rose and five fell. Energy and consumer staples led, while technology and consumer discretionary lagged. Elsewhere in the same source text, energy was described as the day’s best-performing segment because of the oil rally, while consumer staples were described as weak.
Treasury yields reverse lower as long bonds find support
US Treasury yields initially moved higher as surging crude tested the previous session’s highs. Once Trump’s comments temporarily cooled oil, buyers stepped in. After the OpenAI revenue report gained attention, investors judged that AI capital spending might offer slightly less competition for Treasury demand, which helped long-dated bonds further.
The 10-year Treasury yield fell 5 basis points to 5.227%, the 30-year yield dropped 5.9 basis points to 5.602%, and the 2-year yield slipped 1.3 basis points to 4.751%.
A 30-year Treasury auction became a turning point. The US Treasury sold $22 billion of 30-year bonds at a high yield of 5.618%. The bid-to-cover ratio was 2.54, above the average of 2.41 for the previous six auctions. Indirect bidders, including overseas investors, took 72.3%, also above the previous six-auction average of 69.1%.
Molly Brooks, rates strategist at TD Securities, said: 「Demand held up. For investors who want exposure to the long end, that is a constructive signal.」
Vincent Ahn, portfolio manager at SLW Investments, said the 30-year yield matters because 「that is the maturity the Federal Reserve cannot control, and the one global markets must willingly hold.」
On the policy front, Federal Reserve Governor Christopher Waller said further rate hikes may still be needed, though tightening does not have to come at consecutive meetings. St. Louis Fed President Alberto Musalem signaled that rates should keep rising over the next six to nine months, but did not explicitly endorse a hike at this month’s meeting.
Dollar ends flat, gold rises, crypto weakens
Foreign-exchange markets also saw sharp intraday swings. The Bloomberg Dollar Spot Index ended little changed, while the euro rose 0.2% to $1.1215.
Gold gained 0.6% to $4,134.68 an ounce. The gold-silver ratio climbed back to 70, the highest level in two months.
In crypto, Bitcoin fell 1.9% to about $81,800, and Ether dropped more than 4%.