July 23 (Reuters) - Oil prices spiked to $100 a barrel for the first time since May, major tech giants knocked U.S. stocks lower, and Europe's borrowing costs spiked to long-term highs in an unsettling day across markets on Thursday.
Brent crude jumped nearly 7% to $100.5 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. This marks the first time the international oil benchmark has hit that level since late May.
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 locales for its nuclear facilities.
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 spends on AI infrastructure.
Tesla shares tumbled 14% on Thursday as it posted its first cash burn in two years. Alphabet fell about 7% after the Google parent also burned through cash and said it would ramp up AI spending by another $15 billion to $200 billion for the year.
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 1.5%, and the Nasdaq Composite slid around 2.7%. [.N]
"The long-term implications of AI remain powerful, but the near-term investment story is becoming more nuanced," Rick Rieder, BlackRock's chief investment officer of global fixed income, wrote in a global fixed-income outlook released on Thursday.
"The level of spending can remain high even as the growth rate cools, and markets tend to price that shift before the data confirms it."
Europe's government borrowing costs rose to long-term highs as reignited inflation worries prompted some hawkish signals from the European Central Bank, even as the bank held rates steady.
European share markets also fell after an earnings miss from chipmaker STMicroelectronics sent its shares tumbling 17.5%. The pan-European STOXX 600 index fell 1.3%. [.EU]