S&P 500 and Nasdaq Fall as AI Spending Doubts Resurface

U.S. stocks fell on Thursday, with the Nasdaq composite posting its largest daily decline since June, after a series of major corporate earnings reports raised new concerns about the spending race on artificial intelligence. The S&P 500 closed sharply lower, while the tech-heavy Nasdaq dropped on declines in chip stocks. Meta Platforms beat analyst expectations, but its shares fell after the Facebook parent reported its first negative free cash flow in over a decade due to AI expenses and announced a stock split to raise capital. Tesla shares also fell despite an unexpected positive cash flow and reduced 2026 capital spending plans. Geopolitical tensions added to the selloff, as Yemen's Houthi group launched new attacks on Saudi targets, pushing crude oil prices to five-month highs. Investors worry that ongoing Middle East conflicts could sustain inflation and force the Federal Reserve to keep raising interest rates.