Nasdaq drops 1.25 percent as Brent rises 4.1 percent on the Gulf shipping scare

The Nasdaq Composite fell 345.35 points, or 1.25 percent, to 27,193.34 on Thursday, as crude prices jumped on fresh attacks around the Gulf and chip shares gave back part of a record run. The S&P 500 lost 36.41 points, or 0.47 percent, to 7,765.36. The Dow Jones Industrial Average rose 51.77 points, or 0.10 percent, to 51,231.64. Front-month Brent settled 4.1 percent higher. West Texas Intermediate settled 3.6 percent higher.

Energy was the strongest of the 11 S&P sectors. Technology was the weakest. Micron dropped 4.8 percent even after Samsung Electronics, in Seoul, flagged a third-quarter operating profit of 107.4 trillion won, about 80 billion dollars, a figure the market had largely priced. Samsung's own shares slipped 0.2 percent in early Seoul trade. A record profit forecast that does not lift the stock is a signal that the buyer of memory shares wanted a larger number, or is worried about the debt being raised to fund the data centres that consume the chips.

That debt was the other technology story on the tape. The Wall Street Journal reported on Wednesday that Broadcom is lining up 50 billion dollars in financing tied to OpenAI, and that Oracle is seeking a further sum. Thursday's chip decline followed that report by a day. The competition for capital is the mechanism. If the largest buyers of AI hardware fund themselves in the bond market at the same time as governments are issuing into a higher-rate world, the equity of the suppliers can fall even when the order book is full. Micron's 4.8 percent drop is one price of that crowding. It is not a cancelled order.

Oil is the inflation channel. US crude is up more than 60 percent this year, Reuters reported, after a tight market during the Iran war. The Federal Reserve raised rates in September, the first increase since July 2023, in response to that pressure. A 4.1 percent day in Brent does not by itself force another move. It keeps the September hike from looking like a one-off if the shipping attacks continue. Thursday's attacks on King Khalid International in Riyadh and on Abha, which killed three people, were the event crude traders had on the screen. Airlines had already cancelled. The futures market repriced the barrel.

The index split is the cleanest read of the session. The Dow, heavier in industrials and financials, finished up 52 points. The Nasdaq, heavier in the chips that fell, finished down 345. The S&P, which holds both, finished down 0.47 percent. Two days earlier the Nasdaq had closed at a record. A 1.25 percent drop off that high leaves the index still near it, and it ends the idea that the record would extend in a straight line through a Gulf shock.

What Friday's open inherits is a Brent market 4.1 percent higher, a chip complex that sold a record profit forecast, and a rate path that already includes one hike. The 50 billion dollar Broadcom figure is a reported financing, not a completed bond. Until the terms are public, the equity move is the market's guess at the cost of the money.