Oil prices climbed to a five-month high as Houthi attacks in Saudi Arabia heightened concerns about Middle Eastern energy supplies, while US Treasury yields fell sharply as investors sought safe-haven assets amid an AI-driven stock sell-off.
Meta shares slipped despite stronger-than-expected revenue as investors weighed its AI spending plans and proposed new share class, while Tesla fell after cutting its capital expenditure guidance and outlining a gradual production ramp-up for its Optimus humanoid robot.
Oil prices rise as Houthi attacks intensify supply concerns
Brent crude futures rose 4.22%, to $113.40 a barrel, while US West Texas Intermediate gained 2.47%, to $99.55 on Thursday.
Brent was on track for its highest close since May 4.
Saudi Aramco reportedly instructed staff to evacuate its headquarters in Dhahran as fighting between Saudi Arabia and Yemen’s Iran-aligned Houthis intensified.
PVM Oil analyst Tamas Varga said in a Reuters report that attacks on ships in the Strait of Hormuz and Houthi strikes on Saudi Arabia and its oil infrastructure outweighed reports that regional exports had exceeded pre-conflict levels.
Morgan Stanley analysts estimated Middle Eastern crude exports at around 17 million barrels per day last week, compared with an average of approximately 18 million bpd in the 12 months before the Iran war.
Treasury yields fall as investors seek safety
The 10-year US Treasury yield fell more than 19 basis points to 4.953%, dropping below 5% for the first time since September 23.
The two-year yield declined 17 basis points to 4.648%, while the 30-year yield fell nearly 15 basis points to 5.286%.
Investors turned to government bonds as technology stocks sold off and concerns grew over AI-related borrowing and higher energy prices.
Mitch Goldberg, president of ClientFirst Strategy, described the move as a flight to safety, pointing to investor concerns about the volume of debt being issued by AI-related companies in a CNBC report.
Larry Holzenthaler, senior portfolio manager for fixed income at Catalyst Funds, said Treasuries were regaining their safe-haven status amid weakness in technology stocks, geopolitical risks and rising oil prices.
However, Gregory Faranello, head of US macro strategy at South Street Securities, warned that persistently high energy prices could complicate the Federal Reserve’s policy decisions by increasing inflationary pressure.
Meta stock falls despite stronger revenue
Meta shares declined more than 7% on Thursday, despite reporting third-quarter revenue of $64.60 billion, up 26% year over year and above analysts’ expectations of approximately $63.3 billion.
Advertising generated $63.06 billion in revenue, while the company forecast fourth-quarter revenue of $73 billion to $76 billion.
Investors remained focused on Meta’s AI spending plans and proposed Class C non-voting shares, which are expected to take effect on January 19, 2027.
The company plans to distribute one Class C share for each outstanding Class A and Class B share, leaving existing shareholders’ voting power unchanged.
Meta also faces a $25 billion penalty ordered by a New Mexico judge in a data privacy case.
Its third-quarter diluted earnings per share were $3.83, affected by a $9.89 billion charge linked to an August settlement involving teen mental-health litigation.
Without that expense, diluted EPS would have been $7.40.
Tesla falls after cutting capital expenditure forecast
Tesla shares dropped more than 2% on Thursday after the company reduced its full-year capital expenditure forecast to approximately $20 billion from more than $25 billion previously.
The electric vehicle maker reported third-quarter revenue of $28.05 billion, slightly above analysts’ expectations of $27.88 billion.
Adjusted earnings per share reached 48 cents, exceeding the 43 cents expected by analysts.
Tesla generated $1.53 billion in free cash flow, compared with analysts’ expectations of a $4.92 billion cash burn.
Capital expenditure totalled $4.7 billion, below the $7.5 billion expected.
Chief Financial Officer Vaibhav Taneja said the company was managing capital deployment efficiently and planned to fund spending primarily through operating cash flow.
Tesla also secured the capacity to borrow up to $30 billion to support expected capital expenditure growth.
Chief Executive Elon Musk said it could take around a year or longer for the company to reach an annualised Optimus production rate of 20,000 units per week.
Tesla also declined to discuss a potential merger with SpaceX during its earnings call, leaving uncertainty around the possibility of a combination.
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