Dow drops 500 points as Brent crude surges above $100; Alphabet and Tesla tank: Live updates

U.S. equities fell on Thursday, as oil prices surged amid escalating conflict in the Middle East, while investors weighed quarterly results from two of the largest companies in the world, with Alphabet's fueling concerns about increased artificial intelligence spending.

The Dow Jones Industrial Average lost 506.93 points, or 0.97%, to end at 51,711.65. The S&P 500 dropped 1.21% to 7,408.30, while the Nasdaq Composite declined 2.15% to close at 25,137.69. The tech-heavy index was bogged down by a 7% drop in Alphabet and a 14% loss in Tesla following their earnings reports.

Oil prices put more pressure on stocks, as they soared after Yemen's Tehran-backed Houthi militant group claimed attacks on two Saudi Arabian tankers in the Red Sea, fueling concerns about an expansion of the conflict in the Middle East. Prices also moved higher after U.S. President Donald Trump threatened to bomb Iranian infrastructure.

"From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran,"Â the president wrote in a post on Truth Social.

Later Thursday, Axios reported that Trump said he's "considering a massive attack" on Iran. He told the news outlet that it would be "bigger than ever before," before adding, "I am close to making a decision. We are all set for it." The president did not give a deadline for the decision, however.

Brent crude futures gained 7% to settle at $100.69, while U.S. West Texas Intermediate crude futures advanced 6% to settle at $92.19 per barrel. Both Brent and WTI were trading at their highest levels since before the U.S. and Iran reached an agreement to bring their war to an end last month.

Treasury yields rose alongside oil prices, with the 10-year yield briefly topping 4.7% to reach its highest level since January 2025. Rates on the short-end of the yield curve also rose, with the 2-year yield touching a session high of 4.37%.

Ross Mayfield, Baird investment strategist, noted that the 2-year yield's level is "probably more important" for the market for insights on the Federal Reserve's interest rate path. At present, fed funds futures trading indicates a more than 80% chance the central bank will hike rates in September, up from 52% a week ago, per the CME FedWatch tool.

"It's pretty hard to ignore [the conflict], not just because of the oil prices but also because of the pressure across the yield curve," he told CNBC. "The fundamentals, I think, set the market up to have some long-term sustainability, or at least medium-term. But for the next two to three months, it's going to be all about Iran again."

In addition to oil, equities were weighed down by Alphabet shares after the Google parent lifted its forecast for 2026 capital expenditures to between $195 billion and $205 billion, pointing to strong artificial intelligence demand. That increase from its prior forecast range of $180 billion to $190 billion comes as investors have grown more cautious in recent months about hyperscalers' spending around the AI effort.

Other hyperscalers Meta Platforms, Microsoft and Amazon were also in the red Thursday.

Tesla's drop came after the electric vehicle maker posted a big earnings miss for the second quarter. The company's operating expenses also rose faster than revenue during the period.

Both Tesla and Alphabet posted negative free cash flow for the second quarter.

The three leading U.S. indexes finished Thursday's session lower.

The Dow Jones Industrial Average shed 506.93 points, or 0.97%, to 51,711.65. The S&P 500 lost 1.21% to end at 7,408.30, while the Nasdaq Composite dropped 2.15% to settle at 25,137.69.

Investors should remain cautious as Middle East tensions could raise oil prices, pressure consumers, complicate inflation efforts and increase market volatility, according to Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

"Oil [and] gasoline prices will both weaken consumers and the economy while also complicating life for central banks in their fight against inflation," he said. "They will need to think about raising rates more [and] faster than if things were calming in the Middle East."

"We have been cautious for some time heading into the seasonally weak fall period for markets and the midterm elections," he added. "The continuation of the conflict is one more reason to rebalance and keep some dry powder for the possibility of a larger drawdown."

He said he favors U.S. large cap equities, financials, tech, materials and the utilities sectors. He suggested lower allocations in real estate and consumer staples.

Investors should look beyond the spending concerns hitting stocks such as Alphabet, according to Jeff Kilburg, CEO of KKM Financial.

"Additional AI CapEx spend (which used to be rewarded) is now stoking fear. That is short term misguided, CapEx spend will translate into profitably," Kilburg told CNBC in a message. "Earnings are historically strong and stocks (specifically tech names, GOOGL, AMZN, & IBM) are presenting great value. AI profitably is not tangible yet but, it is coming."

Higher gas prices will only start to worry investors when they start spiking far above $4 a gallon, according to Eric Parnell, chief market strategist at Great Valley Advisor Group.

"If U.S. gasoline prices surpass their 2022 peaks in the second half of the year and we start to see prices at the pump pushing $8.00, $9.00 or $10.00 per gallon, the psychological impact for consumers could start to take a measurable bite out of the economy," Parnell said.

"But we're still a long way from that point right now," he added.

As many as 87 companies are reporting earnings this week.Â

So far, of the 95 S&P 500 companies that have already reported, 88% beat earnings estimates by a median of 7%, while the 12% misses averaged 2%, according to data from Fundstrat.

Eighty-three percent of reporting companies have beaten revenue estimates, with a median upside surprise of 3%. Companies missing revenue expectations have done so by a median of just 1%.

The earnings calendar includes several closely watched technology and growth companies. So far, companies such as Tesla and Alphabet have tested artificial-intelligence spending among Wall Street investors.Â

Intel and SAP scheduled to report earnings Thursday after the market closes.

For Michael Tanney, CEO at investment advisory firm Pereon Wealth, Brent crude hitting $100 is more meaningful to headlines than client portfolios.Â

"If we have a sustained price above $120, that's the breaking point where you'll see serious trickle down effects. In the meantime, thankfully the US is energy independent with a 'drill baby drill' animal spirit mentality." Â

Tanney acknowledges that oil prices will remain high for longer periods of time if the Iran war becomes more severe. Â

Tanney also adds the conditions make it a "tougher job" for Fed chief Kevin Warsh, who's trying to halt higher inflation rates.Â

"Bonds should perform well as a ballast under these geopolitical conditions, but with the clear threat of increased inflation, there's a good chance the US has to raise interest rates, which forces further slow down and liquidity drain from the system," he concluded.Â

Bitcoin miners were a bright spot in afternoon trading as investors continued to digest Alphabet's AI spending plans, fueling a rerating that increasingly views the group as owners of digital infrastructure rather than merely producers of bitcoin.

Hut 8 jumped 8%, Cipher Digital rallied 6.5% and Terawulf climbed 4.5%. Core Scientific was up more than 2%.

The rally extended well beyond the AI-exposed names with even the pure-play miners following higher. Mara Holdings gained more than 4%, while Riot Platforms and CleanSpark rose 3% each.

"Today's move appears to reflect the market separating the companies absorbing the cost of the AI buildout from those positioned to monetize the physical bottlenecks required to support it," said Michael Donovan, senior research analyst at Compass Point. "Alphabet's higher capex and near-term free-cash-flow pressure highlight the burden on the companies funding that expansion, while the same spending reinforces the scarcity and value of power, interconnection, and data-center capacity."

Bitcoin itself was trading lower by more than 1% at below $65,000. Hyperscalers were lower, while digital infrastructure companies like Equinix and Digital Realty were little changed.

Expectations that the Federal Reserve will raise interest rates are increasing amid elevated oil prices, but Ron Albahary of Laird Norton Wetherby is taking a different view.

"Markets have spent much of the year debating inflation and interest rates, but this development, may ultimately prove more important for growth," the chief investment officer said. "While consensus remains focused on whether central banks will be cutting or raising rates, a prolonged conflict raises the risk of slowing global growth through higher costs, disrupted trade flows and increased uncertainty.

"The risk of a meaningful economic slowdown is higher today than markets currently recognize," Albahary continued. "Fed prognosticators and the betting markets may have it wrong placing a higher probability of rate increases when rate reductions may be needed at some point over the coming quarters."

As it stands, fed funds futures traders are pricing in an 82% chance that the Fed will raise rates at its September meeting and a 92% chance of a hike at its December meeting. That's according to the CME FedWatch tool.

Tesla shares plunged 14% Thursday, putting the stock on track for its steepest one-day decline since June 2025 after the electric-vehicle maker delivered disappointing second-quarter results and signaled a sharp acceleration in spending that rattled investors.

Capital expenditures more than doubled from a year earlier to $5.79 billion, up 142%, as Tesla said it now expects to spend more than $25 billion this year. The investment surge helped push free cash flow into negative territory during the quarter.

While automotive revenue topped expectations, profitability deteriorated. Gross margin fell short of analysts' estimates as average selling prices weakened and revenue from high-margin regulatory credits declined, raising fresh concerns about the company's ability to balance aggressive investment with earnings growth.

Brent crude futures for July delivery crossed the $100Â per barrel the first time since May 26, after President Trump threatened strikes on Iranian infrastructure over attacks after Yemen's Iran-backed Houthi rebels attacked two Saudi Arabian ships in the Red Sea.

This comes at a time when yields are spiking and the Fed expectations are moving in a hawkish direction.

Adam Crisafulli, founder and president Vital Knowledge Media told CNBC, "Trump has only two options in the Middle East: either escalate militarily in a dramatic fashion (i.e. deploy troops) or pursue some type of negotiated settlement and since he seems extremely reluctant to go down the former path, the latter remains the most likely outcome."

Bullish individual investors plunged to 29.6% in the latest weekly survey by the American Association of Individual Investors, down from 44.9% last week and the lowest since last September. AAII asks investors about their outlook for stocks over the next six months.

Historically, an average of 37.5% of investors usually say they're bullish.

The number of bearish investors climbed to 42.3% this week from 32.9% last week, the most since mid-June. Historically, 31% of investors usually say they're pessimistic.

Investors who count themselves as neutral on the outlook for stocks rose to 28.1% this week from 22.1% last, below the historical average of 31.5%.

Elon Musk said Tesla and SpaceX are working together more closely across multiple projects, while stopping short of commenting on whether the companies could eventually combine.

"As you can tell from the many collaborations on so many fronts with SpaceX, there's more and more overlap, especially with Terafab," Musk said on Tesla's earnings call Wednesday evening, according to a transcript on FactSet. "That's really going to be a gigantic project."

Musk then appeared to allude to speculation about closer ties between the two companies, saying, "Obviously, we can't talk about combining companies and that kind of thing on an earnings call. It's got to be done with the appropriate process."

His comments are likely to fuel investor speculation about deeper integration between the electric-vehicle maker and the rocket company, which already share technology, engineering talent and Musk as chief executive.

The U.S. war with Iran has entered a more dangerous phase as tankers come under attack in the Red Sea and Tehran targets critical infrastructure in the Gulf, according to RBC Capital Markets.

Extreme pressure is building in the region that could send Brent oil prices above $128 per barrel, said Helima Croft, global head of commodity strategy, in a note to clients on Wednesday.

"Given the dangerous escalation currently unfolding, we remain of the view that oil prices could potentially take out the Russia/Ukraine oil price highs of $128/bbl in 2022 or even the 2008 peak of $146/bbl, especially in the worst-case scenario of a full regional war," Croft said.

Ukraine is also escalating its attacks on Russia's oil and products industry. Kyiv has hit more than 150 tankers in the Black Sea and Sea of Azov this month, the analyst said. The tanker attacks have forced the Caspian Pipeline Consortium to stop loading crude at its Black Sea terminal.

About 80% of Kazakhstan's crude is exported through that pipeline, according to RBC.

"The duration of closure remains uncertain, but alternate routes for Kazakhstan are limited (and unlikely to fully offset CPC), meaning production (1.7 mb/d in June) could face shut-ins," Croft said.

The three major averages dropped on Thursday morning.

The Dow Jones Industrial Average shed 604 points, or 1.2%, just after 9:30 a.m. ET, while the S&P 500 declined 1.2%. The Nasdaq Composite fell 1.8%.

Oil prices spiked higher on Thursday following reports of attacks on tankers off the coast of Saudi Arabia and the U.S. renewed threats to escalate strikes against Iran.

Jobless claims fell to their lowest level going back to 1969, suggesting the U.S. economy is accelerating just as rising oil prices add to inflation concerns.

Initial jobless claims fell to 187,000 in the week ended July 18, down from 209,000 in the previous week, according to the Labor Department on Thursday.

The release comes as oil prices spike Thursday, after Yemen's Tehran-backed Houthi militant group claimed attacks on two Saudi Arabian tankers in the Red Sea, adding to concerns of an escalating conflict in the Middle East.

"The outlook for economic growth is showing some signs of overheating if today's weekly jobless claims figures can be believed, but for how long is the question if energy prices continue to spiral upward," wrote ChrisRupkey, chief economist at FWDBONDS.

The European Central Bank has voted to leave its main interest rate unchanged at 2.25%, in a move broadly in line with market expectations.

The ECB said it stands ready to adjust all of its interest rates to ensure that inflation stabilizes towards its 2% medium-term target. Eurozone inflation eased to 2.8% last month.

Ed Hutchings, head of developed market rates at Aviva Investors, said traders now expect a 0.25% hike in September, with inflationary pressure still the main priority for the central bank.

"Inflation expectations remain elevated and if sustained further, even tighter policy may well be needed," Hutchings said.

The hold comes after the ECB in June unveiled a quarter-point hike, its first rate rise since 2023, as inflationary pressures caused by the Iran war energy shock began to weigh on Europe's economy.

Shares of defense company Lockheed Martin were up more than 5% after it delivered an earnings and revenue beat in its second-quarter financial report.Â

Lockheed Martin also boosted its full-year guidance slightly, with both coming above consensus expectations, according to FactSet. Those rosier projections come from higher forecasts for sales across all of its segments, but in particular a jump in its aeronautics business.Â

Meanwhile, media and technology stock Comcast was up 0.5% after it also reported better-than-expected results for the second quarter. The company showed strength in its media and entertainment business, with streaming platform Peacock hitting profitability for the first time and revenue from the content and experience division rising 23% year-over-year.Â

U.S. crude oil rose more than 4% to break $90 per barrel after Iran's Houthi allies said they attacked two Saudi oil tankers in the Red Sea.

Brent futures, the international benmark, traded nearly 5% higher $98.61.

The United Kingdom Maritime Trade Operations Centre said a tanker was struck by an unkown projectile off the coast of Al Shuhqaiq, Saudi Arabia. The attack caused a fire but no causalties have been reported.

The Houthis declared a maritime embargo against Saudi Arabia on Monday.

European regulators have fined Google 890 million euros ($1 billion) alleging the company gives preferential treatment to its own services.

The fine is Google's first under the European Union's sweeping Digital Markets Act (DMA) which aims to scrutinize Big Tech's operating practices in Europe.

Shares of Alphabet and Tesla fell in premarket trading on Thursday after both firms signalled increased AI spending, unnerving investors worried about the mounting costs of the artificial intelligence boom.

Alphabet shares were around 4% lower, while Tesla's stock fell over 5% in premarket trading after both companies reported negative free cash flow for the second quarter on Wednesday.

Management at both companies looked to calm investor fears over spending.

"This is a massive capex year. I'm confident that all the things that we're investing in will yield incredible returns. Really, maybe the best capex returns that we've ever seen," Tesla CEO Elon Musk said on the earnings call on Wednesday.

Oil prices jumped on Thursday, with front-month Brent crude futures briefly topping $98 a barrel before easing to around $97.80.

U.S. West Texas Intermediate crude futures for August delivery were trading at around $89.22 per barrel.

Both contracts were hovering at their highest levels since early June, with both Brent and WTI futures on course for their third-biggest monthly gains in 10 years.

It came amid escalating conflict in the Middle East, with overnight attacks on ships in the Red Sea signaling an expansion of the battleground.

Several companies are moving in premarket trading on Thursday after a busy earnings day. Here are the biggest moves and why:

U.S. Treasury yields advanced on Wednesday, following oil prices higher, as traders await jobless claims data due later in the session.

The yield on the 10-year U.S. Treasury note — the key benchmark for U.S. government borrowing — was up more than 1 basis point to 4.675%.

The 2-year Treasury note yield, which more closely tracks short-term Federal Reserve interest rate policy, rose more than 1 basis point to 4.317%. The longer-dated 30-year Treasury bond yield was higher by more than 1 basis point to 5.161%.

Weekly jobless claims will be released at 8:30 a.m. ET on Thursday.

Shares of European defense champions Thales, Indra Group, and Dassault Aviation have jumped in early trading, as the continent's defense upcycle translated into another quarter of higher revenue and swelling order books.

Shares of French manufacturer of military aircraft and business jets, Dassault Aviation, rose as much as 10% in morning trading after it reported adjusted net sales rising 46% year-on-year to 4.2 billion euros ($4.8 billion) in the first half of 2026.

Thales and Indra stocks rose as much as 5% each after the companies reported half-year earnings early Thursday.

For Thales, Europe's biggest defense electronics group, sales grew nearly 8% year-on-year while order intake increased by 22%.

"Amid an increasingly uncertain geopolitical context, Thales' products and solutions underpinned by security, sovereignty and innovation once again demonstrate their relevance and appeal on a global scale," CEO Patrice Caine, said in a statement.

The European Central Bank is expected to keep interest rates on hold at its policy announcement later on Thursday, but traders will be watching for signs of a hawkish shift in tone from policymakers.

"The ECB should keep the policy rate at 2.25%, but we do see a September hike as likely, especially as oil prices are moving higher again," Senior UK and euro zone rates strategist at ING Michiel Tukker said.

"One could argue for a front-loaded hike today, but over previous years the ECB has always fully telegraphed any policy moves in advance. And with no hikes priced in by markets, deviating from this strategy seems unlikely."

The yield on the U.K. 10-year government bond rose 4 basis points to above 5% on Thursday as new prime minister Andy Burnham cut property taxes on hospitality venues, while oil prices rose 3% as tensions in the Middle East continue to escalate.Â

Burnham's 20% cut on business rates will cost roughly £100 million ($134 million) and aims to protect pubs, clubs and music venues from higher costs.Â

Yields were also higher across Europe as oil prices rose on Thursday after a tanker was struck by an unknown projectile off Saudi Arabia.

Mainland China and Hong Kong stocks rose Thursday, amid broad gains in Asian markets.

Hong Kong's Hang Seng index was up 1.02% in the last hour of its trade. The gains in Hang Seng were led by basic materials and industrials sectors, up 2.9% and 2.3%, respectively.

Mainland China's CSI 300 closed 0.23% higher at 4,728, with declines in real estate and tech capping gains.

The pan-European Stoxx 600 was down 0.66% by 8:40 a.m. in London (3:40 a.m. E.T.) as the continent's regional sectors and major bourses tumbled into the red.

European energy stocks gained 0.94% as oil prices traded higher, and miners advanced 0.1%, while all other sectors retreated into negative territory.

The Italian FTSE MIB led losses among bourses, falling 1.24%. The French CAC 40 dropped 0.92%, as Germany's DAX fell 0.76%. The U.K. FTSE 100 was last seen 0.18% lower.

South Korea's Kospi led gains in Asian markets on Thursday, ending the day at 4.40% higher at 7,096.89. Samsung and SK Hynix, which are Kospi heavyweights, rose 3.65% and over 4%, respectively.

Over in Japan, the Nikkei 225Â closed 0.46% higher at 66,422.60, supported by financial stocks. Mitsubishi UFJ gained 2.24%, Mizuho Financial added 2.78% and Nomura gained 1.34%.

Australia's benchmark S&P/ASX 200 rose 0.18% higher to 8,839.

European stock markets are expected to open Thursday's session in largely negative territory.

Stoxx 50 futures were down 0.28% ahead of the start of trading.

The U.K. FTSE 100 was 0.18% lower, while in France, the CAC 40 was set to open 0.21% down, with Germany's DAX off some 0.43% lower.

The Italian FTSE MIB is set to start trading some 0.22% lower.

UniCredit is aiming to acquire Commerzbank in the fourth quarter.

Speaking with CNBC's "Europe Early Edition," UniCredit CEO Andrea Orcel said the bank is happy with its position in Commerzbank, with the bank now closing in on full control of the German lender, having upped its stake to 48%.

Orcel said the Italian bank is firing on all cylinders, having raised its full-year guidance after posting its best-ever second-quarter and first-half results Thursday.

An acquisition of Commerzbank could occur "potentially" in the fourth quarter, Orcel told CNBC's Carolin Roth.

He said that the two banks remain "very different," adding that a number of alignments need to occur before any full merger takes place.

UniCredit said the Commerzbank deal has evolved from "an attractive financial investment" to a "strategic transaction of substantial industrial value creation."

UniCredit's net profit for the second quarter reached 2.9 billion euros ($3.3 billion), and 6.3 billion euros for the first half. Its full-year net profit target has been upgraded to more than 11 billion euros.

Treasury yields were little changed Thursday, as the probability of the U.S. Federal Reserve keeping rates intact in its meeting next week stayed high, though rate-hike bets have risen, according to the CME FedWatch tool.

The 10-year U.S. Treasury yield was flat at 4.661%. The yield on the 2-year Treasury note was also little changed at 4.304%.

Oil prices rose on Thursday after a tanker was struck by an unknown projectile off Saudi Arabia and U.S. President Donald Trump threatened to bomb Iranian infrastructure in response to any attacks on ships transiting the Strait of Hormuz.

The United Kingdom Maritime Trade Operations on Thursday Asia time posted on social media platform X a tanker was hit by an unknown projectile in the Red Sea. The strike sparked a fire onboard that the crew was fighting, although there were no reported casualties.

Brent crude futures for September delivery gained 2% to $95.99 per barrel. U.S. West Texas Intermediate crude futures advanced around 1.7% to $88.27 per barrel.

Macquarie Group announced Thursday that Greg Ward, currently head of banking and financial services, will succeed Shemara Wikramanayake as CEO in November.

A Macquarie veteran of three decades, Ward joined the firm in 1996 and was its global chief financial officer for 14 years, before taking on other roles in the company.

Wikramanayake will retire effective Nov. 6, after serving in the role for eight years.

Shares of Macquarie traded 0.87% higher Thursday.Â

Hong Kong and mainland China stocks were mixed, as investors continue to keep a close eye on developments in the Middle East, while focusing on the earnings season.

Hang Seng index was 0.31% higher, while mainland China's CSI 300 opened flat. Automakers will likely be in focus in the near term, following news that the U.S. Senate Commerce Committee had advanced a bipartisan legislation aimed at blocking Chinese-linked automakers and vehicle technology from the U.S.

Shares of Samsung Electro-Mechanics jumped more than 8% in early trading Thursday after the company disclosed in a filing that it had signed a 295.12 billion won ($200 million) contract to supply multilayer ceramic capacitors.Â

Samsung Electro-Mechanics did not name the other party. The one-year contract represents 2.6% of the company's annual revenue and runs from Jan. 1 to Dec. 31, 2027.Â

Uber has cut 10% of jobs in its customer service segment, as part of a wider push to streamline its operations, according to Bloomberg.

The news follows reports that the food delivery and ride-hailing company is slashing 23% of jobs in its people division under the direction of President Jill Hazelbaker.

 "Changes are necessary to maximize the effectiveness of the People team and the enormous potential ahead of us," according to an earlier memo by CEO Dara Khosrowshahi.

Uber's tech chief had said that the company exceeded its 2026 AI budget within four months, The Information had reported earlier.

Asia-Pacific markets opened higher Thursday, with Japan's Nikkei 225 adding 0.55% while the Topix rose 0.22%.

South Korea's Kospi advanced 2.3% at open, while the small-cap Kosdaq climbed 1.42%.

Australia's benchmark S&P/ASX 200 was 0.72% higher.

Asia-Pacific markets were set to open subdued on Thursday, as investors keep an eye on Iran-U.S. tensions in the Middle East, while also focus on the earnings season.

Japan's Nikkei 225 was poised to rise, with the Chicago futures contract at 66,325, compared with the index's previous close of 66,115.60.

Hong Kong Hang Seng index futures were last at 24,997, higher than the index's Wednesday close of 24,892.66.

Futures for Australia's S&P/ASX 200′s last traded at 8,839, while the index closed at 8,823.

Tensions continue to escalate in the Middle East, after President Donald Trump said every time Iran shoots at a ship in the Strait of Hormuz, the U.S. will blow up an Iranian bridge or power plant. Trump's comments come following the collapse of the Iran-U.S. ceasefire and the recent deaths of three American service members.

Here are the stocks making the biggest moves after hours:

For more, read our full list of movers here.

U.S. equity futures opened lower on Wednesday night.

Futures tied to the Dow Jones Industrial Average dipped 5 points, or 0.01%. S&P 500 futures and Nasdaq 100 futures were down 0.07% and 0,14%, respectively.