Stocks Erase Sharp Losses as Oil Retreats, Meta-Led AI Rally Supports Recovery

The major averages staged a substantial recovery from sharp morning losses on Thursday, finishing little changed as crude oil retreated from its session high and removed one of the key pressures weighing on equities. The S&P 500 and Nasdaq Composite both ended essentially flat, while the Dow Jones Industrial Average slipped 0.3%. The Russell 2000 declined just 0.1%, while the S&P MidCap 400 fell 0.4%.

The session began on a considerably weaker note as WTI crude surged above $96 per barrel and Treasury yields remained near multi-year highs. The combination of elevated energy prices and borrowing costs weighed particularly heavily on growth stocks, pushing the Nasdaq sharply lower and producing broad losses across the market.

Sentiment improved considerably after reports indicated that a potential phased reopening of the Strait of Hormuz was under discussion. Crude quickly retreated from its intraday highs, easing concerns that another sharp increase in energy prices would intensify inflationary pressures. WTI ultimately settled $2.22 higher, or 2.4%, at $94.68 per barrel, but finished well below its session peak.

Treasury yields remained another significant headwind. An attempted recovery in government bonds ultimately failed amid concerns surrounding additional Federal Reserve tightening, elevated government debt levels, and another soft Treasury auction.

New York Fed President John Williams said it was reasonable to expect another rate increase this year, while Philadelphia Fed President Anna Paulson indicated that “some modest further tightening may be warranted” if economic conditions evolve as she expects. The comments reinforced the higher-for-longer rate environment that has pressured equities throughout the week.

Against that backdrop, the recovery in technology and other growth stocks was particularly notable because it occurred without meaningful relief from elevated Treasury yields. Information technology (-0.3%) finished with only a modest loss after declining more than 1% earlier in the session, while the PHLX Semiconductor Index (-0.3%) staged a similarly strong rebound from its morning lows.

Oracle (ORCL 139.52, -5.04, -3.48%) remained a notable technology laggard after Bloomberg reported that the company sent a “force majeure” notice to the developer of its New Mexico data-center project.

Meta Platforms (META 777.59, +33.49, +4.50%) moved firmly in the opposite direction and provided an outsized boost to the major averages. Shares climbed to year-to-date highs and extended their gain since the beginning of September to roughly 36%.

Enthusiasm surrounding Meta’s Muse AI agent continued to drive the advance. The product’s early reception has given investors greater confidence in the company’s ability to monetize its substantial artificial intelligence investments, helping communication services (+1.9%) finish comfortably atop the S&P 500 sector standings.

Health care (+0.7%) was another standout. Moderna (MRNA 194.82, +12.71, +6.98%) extended its recent surge, while Eli Lilly (LLY 1183.79, +32.80, +2.85%) also posted a strong advance. Energy (+0.4%) finished higher alongside the increase in crude oil, while financials ended unchanged.

Most other sectors remained in negative territory despite the significant recovery in the headline averages. Materials (-1.0%), utilities (-1.0%), and consumer staples (-1.0%) recorded the widest losses, followed by industrials (-0.7%) and real estate (-0.4%).

That weakness was also evident in market breadth. Declining stocks outpaced advancers by nearly 2-to-1 on the NYSE and roughly 3-to-2 on the Nasdaq late in the session, indicating that the flat finishes for the S&P 500 and Nasdaq overstated the strength of the broader market.

Several individual stocks also experienced pronounced moves. Everpure (P 121.83, +12.18, +11.11%) surged more than 11% to record highs following a bullish Analyst Day. MGM Resorts (MGM 33.68, -4.17, -11.02%), meanwhile, ranked among the weakest S&P 500 performers after confirming that People Incorporated (PPLI 35.93, -0.04, -0.11%) had withdrawn its acquisition proposal.

Thursday’s session ultimately looked considerably healthier at the closing bell than it had near the morning lows. Crude oil’s retreat from above $96 per barrel removed one of the market’s most immediate inflation concerns, allowing technology, semiconductors, and mega-cap growth stocks to recover much of their early weakness even as Treasury yields remained elevated.

The resilience of growth stocks helped the S&P 500 and Nasdaq erase their losses, but the underlying picture remained considerably weaker than the headline indexes suggested. Most S&P 500 sectors finished lower, breadth remained negative, and small- and mid-cap stocks failed to participate meaningfully in the rebound.

The session therefore reinforced the market’s increasingly delicate balance. Elevated Treasury yields and volatile crude prices remain substantial macro headwinds, while concentrated strength in AI-related and mega-cap stocks—most notably Meta—continues to provide an important counterweight. On Thursday, that support was enough to rescue the major averages from a much more damaging decline, but not enough to produce a genuinely broad market advance.

Our FTinvest 11 model portfolio fell 2.84% to close at 915.67, marking a sharp reversal following the relative stabilization of the previous two sessions. The decline pushed the portfolio to a new low for the current correction and approximately 16.5% below its all-time closing high of 1,096.33, leaving it firmly in correction territory and well below the 1,000 level.

FTinvest 11 is now down approximately -1.35% year-to-date, meaning the portfolio has moved into negative territory for 2026 after being up more than 18% at its July peak. Thursday’s decline represents a renewed acceleration in September’s drawdown and takes the portfolio below its start-of-year level for the first time in this recent sequence of closes, highlighting the magnitude of the reversal from the summer highs.