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Wall Street’s main indexes retreated from record highs on Thursday as escalating tensions between the U.S. and Iran dampened hopes of an imminent peace deal, while investors digested key inflation data.
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Tehran targeted a U.S. airbase on Thursday after Washington launched fresh strikes. The move came hours after President Donald Trump rejected a report that he was close to a compromise deal with Iran.
Oil prices jumped nearly 3 percent, while U.S. Treasury yields edged higher with the continued closure of the Strait of Hormuz adding to inflation worries.
Data showed U.S. inflation increased at its fastest pace in three years in April, driven by higher energy prices amid the Iran war.
“I don’t think the data changed the narrative. The number was not as bad as feared. That pushes back a little bit against some expectations for rate hikes,” said Angelo Kourkafas, senior global investment strategist at Edward Jones.
“A lot of the focus will still be on the Iran negotiations and the AI trends and these are the two things that will drive the narrative for equities.”
At 10:01 a.m. ET, the Dow Jones Industrial Average fell 110.97 points, or 0.22 percent, to 50,533.31. The S&P 500 gained 1.71 points, or 0.02 percent, to 7,521.68 and the Nasdaq Composite lost 6.80 points, or 0.02 percent, to 26,667.93.
Six of the 11 main S&P 500 sectors were in the red. The industrial sector led losses with a drop of 1.1 percent.
Caterpillar was down 3 percent, weighing on the Dow. Airline shares declined as oil prices rose, with American Airlines, JetBlue and Southwest Airlines down between 1.5 percent and 2.2 percent.
The consumer discretionary sector fell 0.7 percent after gaining nearly 2 percent in the previous session.
AI OPTIMISM, EARNINGS GROWTH FUEL MARKET RALLY
Renewed confidence in AI and earnings growth momentum have underscored the recent rally, with all three major indexes closing at record highs on Wednesday.
The S&P 500 was on track for a ninth consecutive weekly gain, its longest winning streak since December 2023.
Marvell Technology rose 2.2 percent after forecasting second-quarter revenue above estimates. The company’s shares have more than doubled so far this year.
Snowflake soared 34 percent after the data analytics firm lifted its annual product revenue forecast and announced a five-year AI infrastructure deal worth US$6 billion with Amazon Web Services.
Peers Datadog and MongoDB rose 1.1 percent and 9.8 percent, respectively.
Dollar Tree climbed 16.8 percent after the discount retailer lifted its full-year profit forecast, while Best Buy added 13.5 percent after forecasting second-quarter sales above estimates. Kohl’s gained 18.5 percent after posting quarterly sales in line with estimates.
Drone companies rose after The Wall Street Journal reported that the Trump administration was in talks to fund drone firms. Unusual Machines jumped 40.1 percent while AeroVironment and Kratos Defense & Security Solutions added 14.5 percent and 12.7 percent, respectively.
Declining issues outnumbered advancers by a 1.48-to-1 ratio on the NYSE and by a 1.28-to-1 ratio on the Nasdaq.
The S&P 500 posted 7 new 52-week highs and 7 new lows while the Nasdaq Composite recorded 49 new highs and 43 new lows.
Reuters
