Brent crude surged past $100 a barrel this week, its highest level since May, after President Trump threatened new strikes on Iranian infrastructure following Houthi attacks on Saudi Arabian facilities and consecutive nights of U.S. military strikes near the Strait of Hormuz. The escalation raised fears of disrupted shipping through one of the world's most critical oil chokepoints, with an Iranian tanker reportedly catching fire near a mined shipping route.
The energy rally compounded a rough stretch for tech stocks. Alphabet shares sank as much as 7% and Tesla tumbled 13% after both companies posted quarterly earnings showing surging capital expenditures and negative free cash flow. Alphabet's cloud revenue jumped 81% and total sales grew 24%, but $45 billion in AI-related capex spooked investors. Tesla's revenue rose 26% to $22.5 billion, yet adjusted earnings per share missed Wall Street's targets as the company pours money into robotaxis, Optimus robots and new production lines.
The combination of geopolitical risk and AI-spending anxiety pushed the S&P 500 down roughly 1% and the Nasdaq Composite more than 2% at session lows, with investors warning markets "can no longer brush off" the war in the Middle East. Oil majors Occidental Petroleum and ExxonMobil gained on the higher crude prices.