Brent crude, the global benchmark for oil, jumped 2.6% to $111.66 a barrel on Thursday, reaching its highest level in five months as AI-linked stocks slid and dragged markets lower from Asia to Wall Street. Energy is an input cost across the economy—airlines, shipping lines and petrochemical makers price directly off crude—so a sustained move at these levels feeds into transport and goods costs.

By mid-morning in New York, the tech-heavy Nasdaq was down 1.5%, while the S&P 500, which tracks 500 of the largest US companies, had lost 0.8%. Nvidia, the largest US company by market value, fell 2.3%. The chipmaker weighs so heavily on the S&P 500 that its slides reach the index funds inside many retirement accounts—these funds weight their holdings by market value, so a small group of mega-cap tech names can swing the entire benchmark.

The same oil shock rattling equities is already showing up at the pump: gasoline prices jumped 9.1% in September alone.

Asian markets fared worse. South Korea's Kospi, the country's benchmark stock index, fell 3.52% to 5,533.77 after a recovery the previous day. The index is dominated by memory-chip makers Samsung Electronics and SK Hynix, whose chips are core components in AI data centers. Japan's Nikkei 225 dropped 2.65%, and Hong Kong's Hang Seng lost 3.03%. China's CSI 300, which tracks 300 large companies listed in Shanghai and Shenzhen, entered a bear market—the term for a fall of 20% or more from a recent peak.

The selloff came a week after the Kospi plunged 7.57% in a single session on Oct. 15, a day local coverage dubbed "Black Thursday." The plunge triggered a circuit breaker, an automatic trading pause meant to calm panic selling, and the index remains more than 40% below its June peak.

In the US, CoreWeave fell 3.8% on worries about its debt. The company borrowed to buy Nvidia chips that it rents out to other companies through the cloud. Meta dropped 5.8% after its profit missed forecasts, and Lam Research, a chip equipment maker, slid 7.7% after guiding profit slightly below analyst estimates.

Citadel founder Ken Griffin said Tuesday that investors are "almost certainly" in an AI bubble, comparing AI chips to airline seats that cost little to run once bought, so prices can collapse when supply outruns demand. Griffin did not tell investors to sell, but his message still feels contrarian in a market that has been permabullish since the advent of ChatGPT back in 2023.

Rising rates add another layer of pressure. The 10-year Treasury yield stood at 5.03%, up from 3.97% before the Iran war. That yield—the return investors demand to lend to the US government—serves as a benchmark for everything from mortgage rates to corporate borrowing. The Federal Reserve's next rate decision is due Oct. 28, with markets pricing roughly a 15% chance of another hike, while a December increase remains widely expected. That outcome may be at least partially priced in, but a hike would be bad news for markets, as it makes investments more expensive.

The calendar offers further tests: core PCE inflation data—the Federal Reserve's preferred inflation gauge, a price measure that strips out food and energy—follows on Oct. 29, and October payrolls arrive Nov. 6.