Oil prices surge reignites inflation concerns, Dow Jones drops nearly 800 points, Trump administration considers new AI chip export rules

On Thursday, Eastern Time (March 5), after a brief rebound, U.S. stocks turned downward again, with the three major indices all closing lower. The Dow fell over 800 points, briefly dropping more than 1,000 points during the session. Ongoing geopolitical conflicts in the Middle East pushed oil prices to high levels, with U.S. crude oil surging over 10% intraday, marking the largest single-day gain in nearly six years, reigniting inflation concerns. Additionally, the Trump administration is considering new export rules for AI chips, putting pressure on tech stocks.

【U.S. Stock Indices】

At the close, the S&P 500 fell 0.56% to 6,830.71; the Dow Jones dropped 1.61% to 47,954.74; the Nasdaq declined 0.26% to 22,748.99.

The situation in the Middle East continues to drive oil prices higher. Overnight, U.S. benchmark crude futures soared sharply, posting the largest single-day increase in nearly six years. Concerns over disruptions to oil shipments through the Strait of Hormuz persist, while rising energy prices may boost inflation, complicating Federal Reserve policy outlooks and exerting ongoing pressure on the stock market.

In an interview with the media, Trump stated that U.S. military action remains his top priority. When asked about rising oil prices, he said, “I’m not worried about that at all. Once the operation is over, oil prices will fall quickly; if they go up, so be it. But this military operation is far more important than a slight increase in gasoline prices.”

It is reported that this week, Trump and his cabinet discussed measures to suppress prices, including releasing strategic petroleum reserves (SPR), possibly coordinating with other countries for maximum effect; waiving fuel blending requirements; and direct involvement of the U.S. Department of the Treasury in crude oil futures trading—an unprecedented move if implemented. However, if the conflict persists and the Strait of Hormuz remains blocked, oil prices are unlikely to fall in the short term.

Lee Hardman, senior FX economist at Mitsubishi UFJ Financial Group, stated in a report, “Uncertainty remains high, and the market cannot yet determine how long the conflict will last or how much it will impact global energy supplies.”

Rob Haworth, senior investment strategist at Bank of America, pointed out that key market concerns include: first, whether shipping through the Strait of Hormuz can resume; second, how long the war will last. The market has hoped for a short conflict, but as the scope expands, prolonged warfare and further impact could significantly worsen risk sentiment.

Additionally, a document shows U.S. officials are discussing a new export control framework for AI chips, considering requiring foreign investments in U.S. AI data centers or security guarantees as conditions for large-scale chip exports.

These rules are not final and may change. This marks the first attempt since the Trump administration revoked the previous AI proliferation rules to regulate the flow of AI chips to U.S. allies and partners. The aim is to keep much of the AI infrastructure development within the U.S. and direct most procurement to a few U.S. cloud computing companies. The U.S. semiconductor sector declined 1.2% amid the pressure.

【U.S. Treasury Bonds】

U.S. Treasury yields fluctuated slightly, with the 10-year yield closing at 4.14%, and the 2-year yield sensitive to Fed policy at 3.5910%.

【Popular U.S. Stocks】

Among popular stocks, NVIDIA rose 0.16%, Apple fell 0.85%, Google C declined 0.84%, Google A down 0.74%, Microsoft gained 1.35%, Amazon increased 0.98%, TSMC dropped 0.97%, Meta declined 1.07%, Tesla fell 0.10%, Seagate Semiconductor down 1.30%, Intel rose 0.81%.

On the news front, OpenAI officially released GPT-5.4, featuring a “Thinking” mode, and launched ChatGPT, API, and Codex platforms. It also introduced GPT-5.4 Pro, optimized for complex tasks.

Latest reports indicate that Oracle is planning to lay off thousands of employees to cope with funding pressures from its large-scale AI data center expansion.

【Global Indices】

In Europe, the FTSE 100 fell 1.45% to 10,414; France’s CAC 40 declined 1.49% to 8,046; Germany’s DAX dropped 1.61% to 23,816.

In Asia, the Hang Seng Index rose slightly by 0.28% to 25,321; the China Enterprises Index fell 0.38% to 8,451; the Nikkei 225 increased 1.9% to 55,278.

【China Indices】

On March 5, overnight, the Hang Seng Tech Index futures declined 0.60%, the Nasdaq China Golden Dragon Index fell 1.43%, and the FTSE China A50 Index rose 0.96%.

【Chinese Concept Stocks】

Popular Chinese stocks: Tencent Holdings (HK) down 0.79%, Alibaba down 2.21%, Pinduoduo down 0.45%, NetEase down 2.64%, Baidu down 0.88%, Ctrip up 2.16%, Li Auto down 2.03%, Xpeng Motors up 1.08%, NIO down 2.27%.

【Forex and Commodities】

As Middle East conflicts escalate, safe-haven assets see increased demand. The dollar index rebounded, closing up 0.55% at 99.317.

Due to a strong dollar and cooling Fed rate cut expectations, spot gold remained weak throughout the day, with London gold ending down 1.28% at $5,099 per ounce; London silver fell 0.88% to $83.2 per ounce.

War disruptions in supply and shipping, along with production cuts by major Middle Eastern oil producers, pushed WTI and Brent crude to their highest levels since July of the previous year. WTI approached $82 before retracing some gains, ending up 5.65% at $78.88 per barrel; Brent rose 3.57% to $84.31 per barrel.

【Headlines】

Iran Denies Blockade of the Strait of Hormuz, Prepares for U.S. Ground Action, Refuses Negotiations

Iran claims its drones hit the U.S. aircraft carrier Lincoln, and its missiles struck a U.S. oil tanker; Iran’s foreign minister says they are waiting for a U.S. ground invasion, confident in resisting, and warns that further negotiations are pointless. Iran’s UN envoy calls the blockade claims baseless and absurd. The Israeli military says it is entering the next phase of operations, increasing efforts to undermine Iran’s regime and military capabilities. The U.S. is reportedly reallocating resources to support a conflict expected to last at least 100 days or until September. Trump says he must be involved in selecting Iran’s Supreme Leader, and reports indicate he is seeking Kurdish assistance in Iran. Italy states it does not plan to fight, the UK is assisting Gulf countries in defending against Iran, and Qatar reports being attacked by Iran.

Trump Administration Considers New AI Chip Export Rules, Including Requirements for Foreign Investment in U.S. Data Centers

A document shows U.S. officials are discussing a new AI chip export control framework, considering requiring foreign investments in U.S. AI data centers or security guarantees as conditions for large-scale exports. These rules are not final and may change. This is the first effort since the Trump administration revoked the previous AI proliferation rules to regulate AI chip flows to allies and partners. The goal is to keep much of the AI infrastructure within the U.S. and direct most procurement to a few U.S. cloud providers.

Rising Oil Prices Impact Rate Cut Expectations, U.S. Treasury Traders Expect No Fed Rate Cuts in 2023

As of Wednesday, traders estimate a 25% chance that the Fed will keep rates unchanged through December, up from 17% last Friday, before the Iran conflict escalated. Among all scenarios, “no rate cut this year” is the most likely single outcome. Other possibilities include a 25 basis point cut once (24%), two cuts (12%), and a 16% chance of rate hikes.

Report: NVIDIA GTC Conference to Launch New Inference Chips, Potentially Impacting HBM and DRAM Demand

NVIDIA is developing new inference chips based on Groq’s on-chip SRAM architecture, raising concerns that SRAM use may reduce demand for HBM and other main memory. However, industry analysis from KIS suggests this is a misinterpretation: SRAM is not a replacement for HBM/DRAM but a differentiated choice for ultra-low latency scenarios, and memory tier segmentation will ultimately expand the overall market.

OpenAI Launches Most Advanced Professional Model GPT-5.4 with Automated PC Control, Plugins for Excel and Financial Analysis

OpenAI’s first native PC control feature in a general model. GPT-5.4 can directly operate software, browse the web, control mouse and keyboard to complete tasks, and integrate deeply with enterprise applications like spreadsheets and financial tools. Its desktop navigation scores surpass human benchmarks, web search scores hit new highs, and professional knowledge tests meet or exceed expert levels. The tool search mechanism significantly reduces token consumption. GPT-5.4 comes in two versions: Thinking, optimized for complex reasoning, and high-performance Pro, with a context window up to 1 million tokens, priced higher than 5.2; financial service suite launched simultaneously.

Berkshire Hathaway Announces Restart of Stock Buybacks

With $373.3 billion in cash, Berkshire Hathaway disclosed on Thursday that it has resumed stock buybacks this week. Also, new CEO Greg Abel, succeeding Buffett, announced he will personally buy back shares annually. In regulatory filings submitted Thursday, Berkshire revealed it has been repurchasing Class A and B shares since Wednesday. According to Berkshire’s annual report, the company’s policy allows the CEO to buy back shares when the price is below intrinsic value, after consulting with Warren Buffett. The last buyback was in Q2 2024.

Oracle Plans to Lay Off Thousands to Ease Funding Pressures

Latest reports indicate Oracle is planning to cut thousands of jobs to address funding pressures from its large-scale AI data center expansion. Insiders say these layoffs could affect multiple departments and may start as early as this month. Some layoffs are expected to target roles deemed less needed due to AI development, under the leadership of Chairman Larry Ellison, as Oracle expands data centers to provide AI computing power for clients including OpenAI.