Wall Street’s main indexes ticked lower on Thursday, as investors awaited clear signals on the U.S.-Iran war, while a batch of mixed earnings reignited concerns about AI-driven disruption across the software sector.
Iran tightened control over the Strait of Hormuz as Tehran released footage of its commandos storming a huge cargo ship that they claimed to have seized on Wednesday, while demanding the U.S. lift its naval blockade on Iranian ports.
Investors keen to look past war-related risks have shown strong resilience in recent days, but some fatigue has set in, leading to brief episodes of risk aversion, as they await more clarity on how and when the conflict may ultimately be resolved.
With oil prices over $100 a barrel, the risk of an inflation flare-up also remains.
At 09:46 a.m. ET, the Dow Jones Industrial Average fell 154.00 points, or 0.30%, to 49,341.55, the S&P 500 lost 6.61 points, or 0.10%, to 7,131.08 and the Nasdaq Composite lost 57.27 points, or 0.26%, to 24,593.45.
Data on Thursday showed that the number of Americans filing claims for unemployment benefits increased only marginally last week, but risks from war-driven higher prices still threaten the economy.
Packed earnings calendar in focus
The earnings season has been largely strong so far, but because the results reflect only one month of disruption from the Middle East conflict, investors are questioning how dependable they are as a gauge of what lies ahead.
“The earnings themselves don’t reflect the impact of the energy supply shock,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.
While “the oil shock is a drag on growth, there is also a lot of structural support. The market remains comfortable that as long as there is a path towards de-escalation, it can look through higher oil prices in the short term.”
IBM slumped 12% after revenue growth slowed in the first quarter on weakness in its software business.
The results revived concerns that the software sector’s traditional business models could be upended by new AI tools.
Peers Microsoft and Adobe declined 2.6% and 7.3%, respectively.
The S&P 500 information technology sector, which fell 0.6%, was the biggest drag on the benchmark index. A 1.8% gain in the utilities sector, however, limited losses.
Weakness in information technology stocks also sent the Dow and the Nasdaq lower.
Tesla shares fell 3.8%, after the company raised its spending plan to more than $25 billion for the year.
It is in the middle of one of the most expensive bets in its history as CEO Elon Musk channels funds into artificial intelligence, robotics and chips.
Lockheed Martin dropped 3.7% after reporting a lower first-quarter profit.
On the flip side, Texas Instruments surged 10.5% after forecasting second-quarter revenue and profit above Wall Street expectations.
U.S.-listed shares of Cannabis companies gained after the DOJ reclassified FDA-approved and state-licensed marijuana as a less dangerous drug.
Tilray Brands and Canopy Growth rose 5.8% and 6.5%, respectively.
Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE and by a 1.51-to-1 ratio on the Nasdaq.
The S&P 500 posted 28 new 52-week highs and 5 new lows, while the Nasdaq Composite recorded 74 new highs and 41 new lows.
This article originally appeared on The Detroit News: Wall Street slips on Middle East impasse, mixed earnings
Reporting by Niket Nishant and Avinash P, Reuters / The Detroit News
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