US stocks today: Nasdaq plunges 2% as tech earnings spark AI spending worries

Nasdaq's 2% decline reflects a structural rotation away from large-cap technology stocks amid dual headwinds: disappointing earnings from mega-cap firms and escalating concerns about unsustainable AI infrastructure capital expenditures. The weakness in GOOGL and TSLA signals investor anxiety that AI profitability timelines may extend further than consensus models assume.

Crude oil surging above $100/barrel on Middle East geopolitical risk rekindled stagflation narratives, driving bond yields materially higher. This yield environment penalizes duration-heavy tech valuations while simultaneously benefiting defensive and cyclical energy positions. The correlation breakdown between equities and traditional safe-haven instruments indicates heightened macro uncertainty.

Defense contractors like LMT captured portfolio inflows as geopolitical premium reasserted itself, while energy sector positioning shifted into strength on supply-side concerns. The divergence highlights a flight from growth-at-any-cost narratives toward tangible, hard-asset exposure.

Sector implication: This session reinforces a multi-month theme of tech valuation compression and sector rotation toward energy, materials, and industrials. Sustained macro volatility around inflation and geopolitical risk could prolong the technology underperformance cycle, pressuring passive index flows and liquidity in high-beta names.