Wall Street opened weaker on Thursday, as investors paused after a recent rally, weighed down by persistent geopolitical tensions and a mixed batch of corporate earnings.
The Dow Jones Industrial Average fell about 253 points, or 0.51%. S&P 500 slipped 0.26%, while Nasdaq 100 also declined 0.33%, after both indexes closed at record highs in the previous session.
The pullback comes as market participants reassess risk appetite amid uncertainty surrounding the US-Iran conflict and the durability of recent gains.
Geopolitical risks temper rally momentum
Investor sentiment has been supported in recent sessions by resilience in equities, even as tensions in the Middle East persist.
However, signs of fatigue are beginning to emerge as traders await clearer signals on how the conflict may evolve.
Iran’s seizure of two ships in the Strait of Hormuz has added to the unease, alongside ongoing demands for the US to lift its naval blockade on Iranian ports. The blockade remains in place despite President Donald Trump extending a ceasefire indefinitely.
While markets have largely looked past war-related risks, the lack of a definitive resolution has led to intermittent bouts of risk aversion. Elevated oil prices—now above $100 per barrel—have also raised concerns about a potential inflation flare-up that could complicate the economic outlook.
Economic data offered limited reassurance. Weekly jobless claims rose only marginally, suggesting labor market stability, but the broader risks tied to higher energy prices remain a key concern.
Earnings season sends mixed signals
A busy earnings calendar has further complicated the outlook, with results painting a mixed picture for corporate America.
While the broader earnings season has been largely strong, investors are questioning how representative current results are, given they reflect only limited disruption from the Middle East conflict.
Among notable movers, International Business Machines Corporation fell about 9% after reporting slower revenue growth in its software segment.
Other technology names, including Microsoft Corporation and Adobe Inc., also declined.
Defense contractor Lockheed Martin Corporation dropped 4.8% after posting a decline in first-quarter profit, while Honeywell International Inc. and Thermo Fisher Scientific Inc. each fell more than 3% and 8% respectively following their earnings releases.
On the positive side, Texas Instruments Incorporated surged 14% after issuing an upbeat forecast for second-quarter revenue and profit.
Tesla slips as spending concerns resurface
Tesla, Inc. was among the notable decliners, falling about 1.8%. The stock initially rose after reporting better-than-expected earnings, but reversed course after the company signaled a sharp increase in capital expenditure.
Chief Executive Officer Elon Musk said spending would rise “substantially” as Tesla accelerates investments in artificial intelligence, robotics, and chip development. The company has outlined plans to spend more than $25 billion this year, marking one of the most aggressive investment phases in its history.
Despite the cautious tone, the broader earnings backdrop remains supportive. Of the 87 S&P 500 companies that have reported so far, 81% have exceeded earnings expectations, while 76% have topped revenue forecasts.
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