U.S. equity markets sold off sharply Thursday, as fears that Israel and the United States would restart attacks against Iran sent oil prices higher and major tech stocks failed to hold onto recent gains.

The S&P 500 was down 1.4% by midmorning, while the tech-heavy Nasdaq saw declines of 2.2%. The price of international Brent crude climbed more than 2%, while U.S. crude gained more than 1%.

Demand for Treasury bonds also increased — bucking the trend of the last several months — as investors sought out the safe-haven assets as riskier ones like tech stocks sold off. That sent bond yields lower.

The broad sell-off was sparked in part by reporting Wednesday that Israel and the U.S. are preparing for a military operation in Iran after the November midterm elections.

Likely targets include Iran’s energy infrastructure and nuclear sites, according to The New York Times.

U.S. military and diplomatic personnel were also being evacuated from several countries in the Middle East on Wednesday, NBC News reported.

Iranian officials have promised widespread retaliation to any strikes, pointing to critical Middle East data center sites and undersea internet cables as potential targets.

Major tech stocks led the declines in early trading, with Meta and Tesla sliding after both companies reported quarterly earnings Wednesday evening.

Meta’s earnings and revenues beat forecasts, but only after excluding billions of dollars in legal penalties the company paid last quarter. It also warned investors that it expects to increase its spending in the coming year to meet demands for computing power.

A separate regulatory filing revealed that Meta intends to spend an additional $825 billion on contracts related to its AI infrastructure buildout.

Tesla, meanwhile, said it was reining in its capital spending plans, disappointing investors who were hoping for a signal of more aggressive expansion.

The slide in the Nasdaq got additional fuel Thursday morning after Nvidia CEO Jensen Huang said in an appearance on CNBC that capital to finance the AI investment boom was becoming “scarce” due to higher interest rates and a glut of existing spending commitments.

U.S. markets remain near all-time highs. But signs of flagging returns on the AI investment boom have resulted in more intense gyrations lately.

A major sell off in French government debt has also dragged European stocks lower in recent weeks.

“It’s been another difficult 24 hours for markets, as investors grapple with AI growth concerns, higher oil prices, and ongoing fiscal stress,” wrote Henry Allen, director and macro strategist at Deutsche Bank, in a note to clients Thursday.

A significant market draw-down may also put a further dent in Republicans’ midterm election outlook.

President Donald Trump frequently points to solid stock market gains as evidence that his economic agenda has made Americans richer. A significant market stumble ahead of the Nov. 3 election would undermine a core argument for Trump and the GOP.