U.S. stocks closed lower on Thursday, with software stocks leading the decline. The S&P 500 briefly hit a new intraday record high during the session. Markets continued to monitor developments in U.S.-Iran relations and the ongoing corporate earnings season. Former President Donald Trump claimed the U.S. has full control over the Strait of Hormuz. Oil prices surged again amid escalating tensions in the Middle East.
The Dow Jones Industrial Average fell 179.71 points, or 0.36%, to close at 49,310.32. The Nasdaq Composite dropped 219.06 points, or 0.89%, to 24,438.50. The S&P 500 declined 29.50 points, or 0.41%, to settle at 7,108.40. Earlier in the session, the S&P 500 reached a peak of 7,147.78, setting a new intraday high. Market focus was concentrated on geopolitical risks surrounding the Strait of Hormuz. Reports indicated that Mohammad Bagher Ghalibaf, Speaker of Iran's Parliament, resigned from his role as Tehran's chief nuclear negotiator due to intervention by the Islamic Revolutionary Guard Corps (IRGC). This report has not been confirmed by other media outlets, but the potential involvement of the IRGC raised market concerns that Tehran might adopt a more hardline stance in negotiations with the United States. Simultaneously, oil tanker traffic through the Strait of Hormuz remained very low as the U.S. and Iran attempted to enforce competing blockades during a ceasefire period. Iran continues to demand that vessels obtain its permission to traverse the strait, while former U.S. President Donald Trump claimed on Thursday that America has "complete control" over the strategic waterway. Trump stated that ships now require permission from the U.S. Navy to pass through. The U.S. has maintained a blockade on Iranian ports since April 13. Both nations have seized vessels during the ceasefire. Iran seized two cargo ships in the strait on Wednesday, while the U.S. has intercepted multiple Iranian oil tankers. In a social media post, Trump asserted that the U.S. has full control of the strait and will implement strict controls on passing vessels. This move intensified market worries about potential energy supply disruptions and an escalation of conflict. Meanwhile, the corporate earnings season showed mixed results. Tech giant Adobe announced a $25 billion stock buyback program following a decline in its share price. Other heavyweight stocks like American Express and Comcast were also weighed down by the negative market sentiment. Although some companies reported better-than-expected profits, geopolitical uncertainty temporarily overshadowed the positive earnings signals, putting overall pressure on the market. Notable individual stocks on Thursday included IBM and ServiceNow, both of which fell sharply after releasing their latest earnings reports. Tesla's stock initially rose following an earnings beat but subsequently gave up those gains and turned negative after CEO Elon Musk warned that capital expenditures would "increase significantly" as the electric vehicle maker expands into AI-driven autonomous vehicles and humanoid robots. Markets continued to watch developments in the Middle East closely. Trump reiterated on Thursday that the U.S. has complete control over the Strait of Hormuz. In a social media post, Trump stated, "We have complete control of the Strait of Hormuz. Any vessel entering or exiting the strait must obtain permission from the U.S. Navy. The strait will be completely sealed and heavily guarded until Iran agrees to a deal!" This followed Trump's announcement on Wednesday extending the U.S.-Iran ceasefire agreement. On that day, both the S&P 500 and the tech-heavy Nasdaq Composite closed at record levels. The S&P 500 gained 1.05%, and the Nasdaq climbed 1.64%. The Dow Jones Industrial Average advanced 340.65 points, or 0.69%. Late Tuesday, Trump had stated that extending the ceasefire was justified due to the Iranian government being "severely divided." Despite this, geopolitical tensions in the region remain high. Reports indicated that a planned trip by a U.S. official to join peace talks was suspended due to a perceived lack of commitment from Iran. Iranian state media also reported that Tehran's negotiator would not attend, calling talks with the U.S. a "waste of time." On Wednesday, the Iranian navy announced it had seized two container ships in the Strait of Hormuz. The generally strong earnings season has so far bolstered investor sentiment. Among the 87 S&P 500 companies that had reported earnings, 81% surpassed profit expectations, while 76% exceeded revenue forecasts. A chief market strategist noted on Wednesday, "The real difficulty is that we keep seeing very, very tense headlines that make everyone very hesitant and anxious. But ultimately, earnings expectations continue to rise, which actually shows that companies are managing to cut through all this noise, navigate this uncertainty, and still achieve profit growth." Traders are also awaiting the preliminary S&P Global PMI data for manufacturing and services in April. On the economic data front Thursday, U.S. weekly initial jobless claims came in slightly higher than expected but remained at levels indicative of a low pace of layoffs. The Labor Department reported that seasonally adjusted initial claims for unemployment benefits totaled 214,000 for the week ending April 18, an increase of 6,000 from the previous week and above the Dow Jones consensus estimate of 210,000. Continuing claims, which lag by one week, edged up to 1.82 million.
Comments