Oil hits $100, Wall Street sinks on Big Tech AI cash burn

By Lawrence Delevingne and Marc Jones Thu, July 23, 2026 at 1:48 PM PDT | 4 min read

Oil prices spiked to $100 a barrel on Thursday for the first time since May, while major tech giants knocked U.S. stocks lower and Europe's borrowing costs surged to long-term highs in an unsettling day across markets.

Oil Surges on Middle East Disruptions

Brent crude settled up 7% at $100.69 a barrel, following attacks on tankers in the Red Sea that choked off a second crucial Middle East artery for global oil supplies, alongside Iran's near-closure of the Strait of Hormuz.

Yemen's Iran-aligned Houthis struck two Saudi oil tankers as part of a naval blockade on Saudi Arabia, sending prices higher as the brief cessation of hostilities between Iran and the U.S. receded into the rear-view mirror.

The U.S. military carried out a new round of strikes on Iran, marking a 12th successive night of American attacks, and prompting further Iranian retaliation. The White House has threatened additional attacks on Iranian infrastructure and key locations of its nuclear facilities.

Big Tech Earnings Disappoint

Wall Street was on the back foot after Alphabet and Tesla — the first two of the so-called "Magnificent Seven" megacap companies to report this season — spooked investors as both burned through cash in their most recent quarter for their big spending on AI infrastructure.

• Tesla shares tumbled around 14% after it posted its first cash burn in two years.
• Alphabet fell about 7%, with the Google parent also burning through cash while saying it would ramp up AI spending for the year by another $15 billion, to $200 billion.

Investors have rewarded the so-called hyperscalers with lofty valuations on expectations of big revenue gains, but some are now outspending their operating cash flow.

The Dow Jones Industrial Average fell 1%, the S&P 500 lost 1.2%, and the Nasdaq Composite slid around 2.2%.

"The market was already experiencing volatility because of the semiconductor correction, and this week it's getting additional pressure from concerns about Mag-7 capex spending levels and surging oil prices amid renewed geopolitical uncertainty," said Daniel Skelly, head of Morgan Stanley's wealth management market research and strategy team.

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"Long-term tailwinds remain intact, but performance could continue to be choppy at the index level this summer as rotation to new market leadership continues below the surface, especially if the AI hyperscalers struggle to establish durable rallies after announcing earnings."

European Borrowing Costs Rise

Europe's government borrowing costs rose to long-term highs as reignited inflation worries prompted some hawkish signals from the European Central Bank, although the bank held rates steady at 2.25%. It had lifted them in June.

European share markets also fell after an earnings miss from chipmaker STMicroelectronics sent its shares tumbling 17.7%. The pan-European STOXX 600 index fell 1.2%.

Germany's 10-year Bund yield, the benchmark for euro zone borrowing costs, rose above 3.2% for the first time since 2011, back when oil was also on a tear and the bloc's debt crisis was about to break out again.

"Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out," the ECB said.

Markets had bet on just a one-in-five chance of another interest rate hike at the meeting. They do, however, see a four-in-five chance of a hike at the next one in September.

U.S. Treasury Yields Climb

In the U.S., benchmark 10-year Treasury yields on Thursday climbed to their highest levels since January 2025, last trading at 4.7%.

The number of Americans seeking unemployment benefits for the first time unexpectedly fell last week to the lowest since the 1960s, indicating the U.S. job market continues on an even keel and leaving Federal Reserve officials to keep their focus on containing inflation.

"While both labor market and inflation pressures warrant respect, we believe they are likely to moderate over time," wrote Rick Rieder, BlackRock chief investment officer of global fixed income.

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"We continue to favor an income-first approach rather than taking large directional duration positions until the data more clearly validates a turn," Rieder added.

Yen Slips Back to 40-Year Low

The euro dipped back below $1.14 following the ECB decision. The dollar index, which measures the greenback against a basket of major currencies, rose.