Global Markets Sink as AI Sell-off and U.S.-Iran Conflict Escalate

Global stock markets suffered significant losses on Friday, July 18, 2026, as a deepening sell-off in artificial intelligence stocks coincided with spiking oil prices. The S&P 500 fell 1%, the Dow Jones Industrial Average dropped over 406 points, and the Nasdaq composite sank 1.4%. Investors reacted to the release of Kimi K3, a low-cost open-source AI model from the Chinese startup Moonshot AI, which raised fears regarding unsustainable demand for Western AI chips and challenged rivals like OpenAI and Anthropic. Nvidia Corp. and Applied Materials saw notable losses, while South Korea's Kospi later sank 4.5% due to the volatility.

Market instability was exacerbated by an escalating military conflict. The United States expanded its airstrike campaign against Iran, targeting bridges and a port tower in response to the killing of U.S. troops. Iran retaliated by firing missiles toward Jordan and other U.S. allies across the Middle East. These actions pushed Brent crude prices up 4.6% to $88.10 and nearly halted tanker traffic in the Strait of Hormuz, driving average U.S. gasoline prices above $4 per gallon.

Other corporate pressures contributed to the downturn, including a failed Starship rocket test flight by SpaceX and disappointing revenue reports from Netflix Inc. and Intuitive Surgical. However, by Monday, July 20, Wall Street futures rose and oil prices retreated despite the U.S. announcing continued attacks for a ninth consecutive night. Positive earnings from AMC and Domino's and a $100 billion U.S. expansion plan from TSMC provided some market counterbalance.