NEW YORK, July 23 (Xinhua) -- U.S. stocks suffered heavy losses on Thursday as higher capital expenditure guidance from Alphabet and Tesla rattled investor confidence, while global oil prices surged past 100 U.S. dollars a barrel amid persistent Middle East hostilities.
The Dow Jones Industrial Average fell by 506.93 points, or 0.97 percent, to 51,711.65. The S&P 500 sank 90.66 points, or 1.21 percent, to 7,408.3. The Nasdaq Composite Index shed 553.21 points, or 2.15 percent, to 25,137.69.
Seven of the 11 primary S&P 500 sectors ended in the red, with communication services and consumer discretionary leading the laggards by losing 5.2 percent and 5.12 percent, respectively. Meanwhile, industrials and health led the gainers by rising 1.77 percent and 1.29 percent, respectively.
The broader market decline was driven by a sharp sell-off across "The Magnificent Seven" technology heavyweights following Wednesday's after-hours quarterly disclosures. Although Google parent Alphabet posted fundamentally solid financial results, the company's decision to raise its capital expenditure guidance stoked intense market scrutiny regarding near-term return on investment for AI infrastructure. Alphabet lost nearly 7 percent on Thursday.
Concurrently, Tesla plummeted 14.52 percent after delivering a significant second-quarter earnings miss. Tesla CEO Elon Musk further cautioned that 2026 will be a "massive capex year" as the firm aggressively ramps up investments in Optimus humanoid robotics, autonomous robotaxis, and specialized data center capacity. The cautious sentiment spilled over to peer mega-cap growth equities, pulling Amazon and Meta Platforms down 4.57 percent and 3.36 percent, respectively.
Compounding Wall Street's anxiety, global energy markets experienced a major price surge as military conflicts in the Middle East showed no signs of abatement. West Texas Intermediate crude for September delivery jumped 5.36 dollars, or 6.17 percent, to settle at 92.19 dollars a barrel on the New York Mercantile Exchange. Meanwhile, Brent crude for September delivery surged 6.62 dollars, or 7.04 percent, to settle at 100.69 dollars a barrel on the London ICE Futures Exchange, breaking above the triple-digit threshold.
The sharp rise in crude oil prices also pushed U.S. Treasury yields higher. The yield on the benchmark 10-year U.S. Treasury note topped 4.7 percent, reaching its highest level since January 2025. Short-term yields also escalated, with the 2-year Treasury yield climbing above 4.36 percent. Market strategists at Baird noted that the short-end rate trajectory provides crucial insight into upcoming Federal Reserve monetary policy maneuvers. According to the CME Group's FedWatch tool, Fed Funds futures now indicate an 82 percent probability that the central bank will enact an interest rate hike at its September meeting, up sharply from a 52 percent likelihood estimated just one week prior.
Meanwhile, mortgage rates in the United States reached their highest level in nearly a year. The average 30-year fixed-rate mortgage rate rose to 6.58 percent through Wednesday, according to Freddie Mac data, up from 6.55 percent a week earlier. Fifteen-year mortgage rates jumped to 5.96 percent, from 5.93 percent.
On the earnings front, Lockheed Martin jumped 10.54 percent with RTX and Honeywell International up 7.33 percent and 5.7 percent, respectively. Conversely, transport and telecommunication equities faced sharp pressure. American Airlines dropped 8.35 percent under the weight of surging jet fuel projections. T-Mobile US fell 10.75 percent, and Comcast pulled back 6.8 percent. Chipmaker Intel slipped 2.33 percent ahead of its scheduled earnings report after the closing bell.
