U.S. stocks closed lower on Thursday, with the Dow Jones Industrial Average ending a five-session winning streak as traders monitored developments in the Middle East and an agreement to reopen the Strait of Hormuz moved forward.
The Dow fell 464.02 points, or 0.85%, to 53,885.10. The Nasdaq Composite declined 15.09 points, or 0.06%, to 26,348.35, while the S&P 500 shed 13.53 points, or 0.18%, to 7,710.02.
Among Dow components, Salesforce shares dropped 3.2% after the company announced a management restructuring. Sandisk fell 6.8% as its fiscal fourth-quarter results failed to impress investors. AppLovin plunged 19.7% following a mixed quarterly performance. Western Digital declined 13% after issuing disappointing fiscal first-quarter guidance, though its fourth-quarter results exceeded expectations.
"Following a wave of active trading triggered by earnings season, the market appears to be mostly catching its breath," said JJ Kinahan, head of retail expansion and alternative investment products at the Chicago Board Options Exchange. "Better-than-expected profits and sales, if accompanied by weak forward guidance, don't always push stock prices higher." He added that "some profit-taking may also be occurring," noting that both Sandisk and Western Digital have surged significantly over the past year. Sandisk has skyrocketed 3,000% in the last 12 months, while Western Digital has gained more than 500%.
Oil prices rose Thursday amid Middle East tensions. Iran's state news agency quoted a member of the country's parliament as reporting that a draft proposal regarding vessel passage conditions in the Strait of Hormuz would reportedly ban U.S. and Israeli ships from using the key waterway. Iran's Fars News Agency said the plan is currently being reviewed by a parliamentary committee. Separately, an oil tanker passing through the strait recently heard explosions near the coast of Oman. Nonetheless, Iran and Oman remain close to finalizing an agreement to reopen the Strait of Hormuz. An Iranian government official told MSNBC that, under a provisional deal, shipping through the strait would be exempt from fees or tolls. "The market has seen multiple false dawns during this conflict," wrote Deutsche Bank strategist Jim Reid. "While details are becoming more specific, the focus has now shifted from whether a deal can be reached to what the final arrangement will look like, including the unresolved question of whether Iran will ultimately be allowed to charge tolls on vessels using the strait."
Comments