The broader technology sector faced a volatile session as chip stocks reacted unevenly to the news. South Korean chipmakers surged on expectations of continued high spending, but Europe’s STMicroelectronics plummeted 14% following a disappointing earnings report. Tesla also struggled, losing 4% after posting its first negative free cash flow in over two years, adding to a sense of unease among investors bracing for Intel’s upcoming earnings disclosure.
Energy markets are simultaneously fueling wider economic anxiety. Brent crude climbed toward $98 per barrel as regional conflicts in the Gulf and Red Sea disrupted shipping lanes. This surge in energy costs is reverberating through interest rate and bond markets, driving short-term U.S. Treasury yields to 17-month highs. With the European Central Bank meeting today, policymakers face mounting pressure to adopt a hawkish stance as natural gas prices rise ahead of the winter storage season. Futures markets now anticipate two rate hikes from both the ECB and the Federal Reserve before the end of the year.
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