The stock market has recently exhibited a notable correlation between fluctuations in oil prices and the performance of major indexes, a trend that continued on Thursday. Crude oil futures saw an uptick, driven by ongoing geopolitical tensions in the Middle East, which contributed to a downturn in stock values.
On his Truth Social account, former President Donald Trump remarked that Iran is “begging” the U.S. for a diplomatic resolution and cautioned them to “get serious soon.” This statement coincided with reports indicating that the U.S. had presented Iran with a 15-point peace proposal. Despite the ongoing review of this plan by Tehran, sources indicate that Iran deems some of the demands excessive, making negotiations unlikely until the terms are revised.
As uncertainty in the diplomacy impacted market sentiment, oil prices surged, with front-month West Texas Intermediate crude futures climbing by 4.6% to settle at $94.48 per barrel. Conversely, major stock indexes declined sharply. The Dow Jones Industrial Average ended the day down 1.0% at 45,960, while the S&P 500 dropped 1.7% to 6,477. The tech-heavy Nasdaq Composite experienced a significant plunge, falling 2.4% to 21,408, thereby entering correction territory following a 10% decrease from its October peak of 23,958.47.
A couple of significant developments concerning large-cap stocks had a heavy influence on the negative performance of the Nasdaq. Meta Platforms (META) faced an 8.0% decline, marking its worst day since late October, following two legal setbacks this week. The company was ordered to pay $375 million in a civil case in New Mexico, where it was charged with failing to adequately protect young users from online predators. In a separate case in California, a jury found that design elements like infinite scrolling in apps developed by Meta and YouTube, a subsidiary of Alphabet (GOOGL), were addictive and detrimental to younger audiences. The jury awarded $6 million total in compensatory and punitive damages, with Meta responsible for 70% of the penalties.
Meanwhile, SanDisk (SNDK) continued its sell-off, closing down for the fifth consecutive day, having fallen 28% since hitting a record high of $772.09 earlier in the year. The sharp decline of 11% on Thursday could be attributed in part to Google’s recent launch of TurboQuant, a new memory compression technique aimed at enhancing the affordability and speed of artificial intelligence models. Additionally, some market watchers speculate that this downturn may be linked to profit-taking following a tenfold rise in SanDisk’s share price over the past year.
Despite this ongoing sell-off, Morgan Stanley analyst Joseph Moore expressed a positive outlook, maintaining an Overweight (Buy) rating and a price target of $690 for the tech stock, suggesting an anticipated 14% upside from current levels. Moore characterized the current market’s concerns about SanDisk’s durability as overstated, suggesting that memory supply constraints remain a critical factor for the AI sector’s future.
