Dow Tumbles 600 Points as Brent Crude Tops $100, Alphabet and Tesla Drop

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.

The Dow Jones Industrial Average lost 604 points, or 1.2%. The S&P 500 dropped 1.2%, while the Nasdaq Composite lost 1.8%.

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,” the president wrote in a post on Truth Social.

Brent crude futures for July delivery gained 6% to trade above $99 per barrel after briefly hitting $100 earlier in the day, while U.S. West Texas Intermediate crude futures advanced 5% to above $91 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.

“Inflation has remained top of the agenda for markets this morning, with Brent crude moving up ... as the Middle East escalation continues,” Deutsche Bank’s Jim Reid wrote in a note on Thursday morning.

Treasury yields rose alongside oil prices, with the 10-year yield reaching its highest level since January 2025.

“Indeed, the strikes between the U.S. and Iran show no sign of easing, and the Houthis said they targeted two oil tankers in the Red Sea yesterday, raising fears that the conflict is widening. So that’s pushed oil prices up to a 7-week high and has also fueled speculation about more rate hikes.”

Equities were also weighed down by a 5% slide in Alphabet shares after the Google parent lifted its forecast for 2026 capital expenditures to as high as $205 billion, pointing to strong artificial intelligence demand. The increase comes as investors have grown more cautious in recent months about hyperscalers’ spending around the AI effort.

Tesla also dropped more than 8% 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.