Major U.S. stock indexes fell on Thursday as investors began pricing in the potential consequences of a renewed and prolonged conflict in the Middle East.
Brent crude futures climbed to $100 per barrel following reports of attacks on oil tankers off the coast of Saudi Arabia. West Texas Intermediate crude futures rose 6% to approximately $92 per barrel.
The surge in oil prices raises concerns about inflation. Thus, expectations for tighter monetary policy also increased, with CME Group’s FedWatch tool indicating that the probability of a Fed rate hike next week had risen to 35%.
Investors were also assessing quarterly results from Alphabet and Tesla. Alphabet shares fell 6.9% after the company raised its 2026 capital expenditure forecast from $180–190 billion to between $195 billion and $205 billion.
Tesla shares dropped 14% after it reported weaker-than-expected earnings. The company also said it expects capital expenditure to exceed $25 billion this year.
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