US stocks fell on Thursday as fears of an escalating Middle East conflict pushed crude oil futures higher, intensifying inflation worries just under two weeks before the US midterm elections. Meta plunged as investors digested the company's results and the latest batch of tech earnings, looking for signs that massive AI spending is paying off.

The selling was concentrated in large-cap technology names, with the Philadelphia Semiconductor Index (SOX) slumping 6.7%. The Nasdaq 100 dropped 2.9%, its biggest decline since late June. The S&P 500 fell 1.2%, while the equal-weighted S&P 500 index, a measure of market breadth, rose 0.8%.

Joseph Saluzzi, partner and co-head of equity trading at Themis Trading LLC, said: "It feels like a classic risk-off day today, and tech stocks are always the first to get hit. The rally in bonds also confirms this risk-averse posture."

The large-cap tech stocks that drove the US bull market suffered heavy losses. Mixed quarterly results from companies such as Meta and Tesla raised concerns that the sector has risen too much and too fast since the end of March. Investors did not fully exit the stock market, instead rotating into defensive sectors such as consumer staples and utilities.

WTI crude rose 2.2%, while the 10-year US Treasury yield fell back to 4.97%. Due to threats posed by Houthi forces, the United States ordered some diplomats and their families to evacuate Saudi Arabia.

Meta fell 7%, its biggest drop since July, despite reporting better-than-expected results and raising its capital expenditure forecast. Tesla dropped 3.1% after the electric vehicle maker cut its spending plans. Lam Research's weaker-than-expected guidance weighed on the entire chip equipment sector, overshadowing Texas Instruments' better-than-expected results.

The situation in Europe also added to market unease, with global investors selling high-risk assets and pressure deepening in the French bond market. Blackstone shares rose 8.4%, one of the few bright spots, as President Jon Gray pushed back against billionaire Ken Griffin's claim a few days earlier that there is a bubble in artificial intelligence (AI).

At the close, the S&P 500 fell 1.2% to 7,663.43 points. The Dow Jones Industrial Average was roughly flat at 52,867.98 points. The Nasdaq Composite dropped 2.6% to 26,008.86 points. The Nasdaq 100 fell 2.9% to 28,958.69 points. The Russell 2000 rose 0.1% to 2,784.026 points.