0723 | Stocks Drop as AI Doubts Hit Tech, Oil Tops $100, Yields Jump

Mia: From Bri's podcast family, this is After Market. I'm Mia.

Milo: And I'm Milo. Let's get into what's moving right now.

Mia: US stocks tumbled with the S&P 500 heading for its worst day in a month as doubts about the AI investment boom dragged down big tech.

Milo: Brent crude touched $100 a barrel for the first time in two months after Houthi militants claimed attacks on Saudi tankers in the Red Sea. Alphabet and Tesla tested Wall Street's patience with massive AI spending increases. And US Treasury yields rose to their highest levels of the year.

Mia: US stocks tumbled Wednesday with the S&P 500 Index heading for its worst day in a month. The selloff was fueled by growing doubts about whether the debt-fueled artificial-intelligence investment boom will actually pay off.

Milo: And the pain was concentrated in the biggest names. The Magnificent Seven group of megacap technology stocks suffered its biggest one-day drop since the tariff tantrum in April 2025.

Mia: That is a staggering number — these seven companies lost $767 billion in market value in a single session. Results from Alphabet and Tesla cast doubt on the durability of the AI trade that has powered the stock market for more than three years.

Milo: Tesla fell 14 percent and Alphabet sank 6 percent as both companies signaled higher spending on artificial intelligence. As one summary put it, AI spending is now overshadowing growth.

Mia: And there was another force pushing markets around. The odds of a Federal Reserve rate hike surged as oil prices ripped higher, and that pushed US Treasury yields to 2026 highs.

Milo: Let's go to that oil story. Brent crude touched $100 a barrel for the first time in two months.

Mia: The move followed an announcement by Iran-backed Houthi militants that they had attacked two Saudi Arabian tankers in the Red Sea. Yemen's Houthis stated they targeted the vessels with drones and missiles for allegedly violating their maritime blockade.

Milo: And that was not the only escalation. US President Donald Trump threatened to bomb Iranian infrastructure and said the United States would hold Iran responsible for Houthi attacks.

Mia: The combination deepens fears of a wider Middle East conflict and direct supply disruptions. One analysis noted that breaking through the $100 level opens the possibility of a further run toward $120.

Milo: Meanwhile, three crude supertankers were reported slipping out through the Strait of Hormuz. And US oil exports look set for a comeback as the renewed Iran conflict spurs new buyers.

Mia: Back to the tech selloff. Alphabet and Tesla really tested Wall Street's patience after both companies reported massive AI-related spending increases in their quarterly earnings.

Milo: The Magnificent Seven group lost around $767 billion in value and was on track for its biggest one-day drop since the tariff tantrum in April 2025. Tesla shares fell 14 percent and Alphabet sank 6 percent as those AI spending concerns spooked investors.

Mia: But the picture was not entirely negative for Alphabet. Google Cloud CEO Kurian stated that customers were spending 50 percent more, and the segment blew away expectations.

Milo: And Intel also delivered a notable result. The company blew past estimates and recorded its fastest sales growth in almost 15 years on what it called unprecedented demand — though Intel's stock had already dropped 27 percent from its June record highs.

Mia: All of this fed into the bond market. Yields on US Treasury debt rose to their highest levels of the year.

Milo: The 10-year yield climbed on Wednesday to its highest since January 2025. Surging oil prices rekindled inflation fears as the threat of escalation in the Iran war sent prices higher.

Mia: Investors are increasingly readying for the Federal Reserve to hike interest rates as soon as its September meeting next week. Traders also reacted to a slump in US initial jobless claims, which fell to the lowest level since 1969.

Milo: And it's not just a US story. In Europe, traders see a September rate hike as the European Central Bank weighs an energy price spike.

Mia: In corporate news, Eli Lilly says it plans to file for approval of its next-generation obesity drug retatrutide in 2027 after clearing two more late-stage trials that delivered positive results from five studies.

Milo: And Albertsons shares sank Thursday after the grocer reported core business softness and lowered its full-year outlook, blaming weaker grocery spending.

Mia: That's After Market for today. I'm Mia.

Milo: And I'm Milo. Thanks for listening.