Market Overview
US equities closed mixed on Thursday, October 8, 2026, as a significant tech sector sell-off, particularly impacting AI-related stocks and chipmakers, largely offset a modest gain in the Dow Jones Industrial Average. This tech weakness followed a report questioning OpenAI’s revenue outlook. Concurrently, crude oil prices surged amidst escalating geopolitical tensions in the Middle East and new supply disruptions. US Treasury yields, which had recently climbed to multi-year highs, pulled back slightly, despite the $22 billion 30-year Treasury bond auction reportedly tailing. Looking ahead to the APAC open, Australian futures were tracking modestly higher, suggesting a potentially resilient start for the region.
Markets
Major US indices saw varied performance. The Nasdaq Composite (^IXIC) led declines, retreating 1.25% to close at 27,193.34, while the S&P 500 (^GSPC) fell 0.47% to 7,765.36. In contrast, the Dow Jones Industrial Average (^DJI) managed a 0.10% gain, closing at 51,231.64.
Crude oil prices saw a notable rise. Brent crude oil (BZ=F) advanced 3.26% to trade at $103.47 a barrel, and WTI crude (CL=F) gained 2.88% to $90.82 a barrel, both driven by supply concerns.
In the bond market, US Treasury yields eased from their recent highs. The benchmark 10-year yield (^TNX) pulled back 4.60 basis points to 5.231%, and the 30-year yield (^TYX) was down 5.50 basis points to 5.606%.
Ahead of the Australian market open, ASX 200 futures were tracking 19 points, or 0.2%, higher at 8715. The Australian Dollar (AUDUSD=X) was little changed, closing down 0.29% at 0.6962.
What Drove Markets
The primary driver of US equity weakness was scrutiny over the AI sector’s profitability. A report indicated that OpenAI’s annualized revenue was about $20 billion less than previously signaled, with financial documents pointing to $50 billion rather than the $70 billion previously estimated. This triggered a broad sell-off in AI-related technology stocks and chipmakers, reigniting investor concerns about the sustainability of soaring AI infrastructure investments. Major chipmakers like Nvidia (-2.94%), AMD (-3.90%), Intel (-5.34%), and Broadcom (-4.35%) all experienced pressure. Cloud giant Oracle (-5.48%) and hyperscaler Microsoft (-1.35%) also declined. Conversely, Palantir Technologies (+2.40%) bucked the trend, gaining after Goldman Sachs cited more upside potential from a shift to sovereign AI and bespoke applications.
Geopolitical risks and supply disruptions fueled the surge in crude oil prices. Intensifying conflict between Saudis and Houthis led to hundreds of flight cancellations in Riyadh, while reports emerged of Iran ramping up attacks on tankers in the Strait of Hormuz. Approximately 9.5 million bpd, around 30% below normal levels before the Iran war, exited Hormuz in the week ended Tuesday. Further supply concerns arose from Hurricane Isaias threatening US offshore production in the Gulf of Mexico, with oil companies shutting in about 500,000 bpd, or 25% of offshore production. Prices later pared some gains after President Donald Trump stated in a social media post that the US was having “productive” talks with Iran and that the US would not attack Iran before the November 3 midterms. Iron ore prices were down 0.2% to $US91.30 a tonne.
Despite the day’s slight retreat, the market remains in an environment of elevated yields and a “higher-for-longer” rate outlook. Earlier in the week, the US 10-year and 30-year Treasury yields scaled fresh 24-year highs. US Treasury yields eased slightly from their recent 24-year highs, with the $22 billion 30-year Treasury bond auction reportedly tailing. The Federal Reserve’s disposition appears to be shifting due to inflation pressures, primarily driven by energy prices. While recent softer US economic data, including September nonfarm payroll additions of 29k (the slowest pace this year) and an unemployment rate ticking up to 4.2%, led to subdued near-term rate hike bets (CME FedWatch tool showed nearly 81% odds of holding steady this month), minutes from the September Fed meeting revealed that most policymakers still anticipate another rate hike by the end of the year. Initial jobless claims for the week ending October 3 fell to 197k, the lowest reading since the week ending July 18. US Q2 real gross domestic product growth was also revised upward to 2.2% from 1.5%. Australia’s 10-year yield stood at 5.39%.
In other corporate news, PepsiCo (+3.73%) gained after reporting a quarterly top- and bottom-line beat, despite lowering its full-year profit outlook. Starbucks (0.40%) shares dipped following reports that the company had explored an acquisition of Chipotle Mexican Grill (+6.11%), which saw its shares advance significantly.
Stocks to Watch
- Nvidia (NVDA): Declined 2.94% amidst broader AI investment scrutiny following the OpenAI revenue report.
- AMD (AMD): Fell 3.90% as part of the tech and AI trade stumble.
- Intel (INTC): Tumbled 5.34%, reflecting the broader semiconductor sector decline.
- Broadcom (AVGO): Shed 4.35% of its value, impacted by the OpenAI revenue report. Broadcom was also reportedly gathering over $50 billion in financing for OpenAI’s custom AI chip.
- Oracle (ORCL): Experienced significant pressure, down 5.48%, as a key tech name and hyperscaler, reportedly in discussions with Apollo and Goldman Sachs over a large chip purchase.
- Microsoft (MSFT): Declined 1.35% amidst AI profitability concerns. The Trump administration also suspended a program for tech companies, including Microsoft, Cognizant Technology, Infosys, Tata, Wipro, HCL Technologies, and Capgemini, due to abuse.
- Micron (MU): Posted sharp losses, down 4.79%, reflecting weakness across chipmakers.
- Palantir Technologies (PLTR): Stood out with a 2.40% gain following an upgrade, as Goldman Sachs cited more upside potential from a shift to sovereign AI.
- Starbucks (SBUX): Dipped 0.40% after reports of exploring a potential acquisition of Chipotle Mexican Grill.
- PepsiCo (PEP): Gained 3.73% after reporting a quarterly top- and bottom-line beat, despite lowering its full-year profit outlook.
- Chipotle Mexican Grill (CMG): Advanced 6.11% on news that Starbucks had explored a potential takeover.
- SpaceX (SPCX): Elon Musk’s SpaceX was reportedly in talks with lenders over securing $40 billion in financing to buy Nvidia processors.