US stocks gained on Thursday as Wall Street was optimistic about a potential deal to reopen the Strait of Hormuz.
However, technology stocks were weak following the latest corporate earnings reports.
The Dow Jones Industrial Average rose 0.1% or 47 points, while the S&P 500 was almost unchanged after both indexes reached record highs earlier this week.
The Nasdaq Composite fell 0.42% as semiconductor and software stocks came under pressure despite generally upbeat financial results.
Investors also assessed fresh labor market data ahead of Friday’s closely watched nonfarm payrolls report, while continuing to monitor developments in the Middle East that could influence energy prices and expectations for Federal Reserve policy.
Chip and software stocks slide despite strong outlooks
Semiconductor stocks led declines after investors reacted negatively to quarterly forecasts from several technology companies.
Western Digital fell more than 18% after issuing quarterly revenue guidance that exceeded Wall Street expectations but failed to satisfy investors following the stock’s sharp rally this year.
Sandisk dropped more than 11% despite also forecasting revenue above estimates, as the company continued to benefit from artificial intelligence-driven demand.
The weakness spread across the broader semiconductor sector.
Micron Technology declined about 5%, while Advanced Micro Devices, Marvell Technology and Intel fell in trading.
Software stocks also traded lower following a series of earnings releases.
AppLovin plunged about 18% after missing quarterly revenue expectations, while Datadog fell roughly 15.8% after reporting second-quarter results.
Among megacap technology companies, Meta Platforms and Amazon posted modest gains, while Apple advanced about 1%.
Alphabet gained slightly even after reports that the company is seeking to raise as much as $25 billion through a US bond offering.
The stock had already fallen 4% in the previous session following its artificial intelligence leadership restructuring.
SpaceX shares rose about 0.9% ahead of the expiration of the first tranche of its post-IPO lock-up period, which could significantly increase the number of publicly tradable shares.
Middle East developments remain market focus
Investor sentiment continued to be influenced by diplomatic developments surrounding the Strait of Hormuz.
Reports indicated that Iran and Oman were moving closer to an agreement that could reopen the strategic waterway, a route through which a significant share of global oil shipments passes.
Under a temporary arrangement, shipping through the strait would reportedly not be subject to fees or tolls.
Brent crude traded near $80 per barrel as markets awaited further details on any potential agreement between Iran and the United States.
The improving outlook for energy supplies has helped support broader equity markets this week after lower oil prices eased concerns about inflation and interest rates.
Economic data and Fed outlook in focus
Markets also digested fresh economic data ahead of Friday’s employment report.
The Labor Department reported that initial jobless claims totaled 199,000 for the latest week, below economists’ expectations of 202,000, suggesting the labor market remains relatively resilient.
With Federal Reserve Chair Kevin Warsh offering little forward guidance, markets remain divided over the September policy meeting.
According to CME FedWatch data, expectations for a rate hike and for rates to remain unchanged have moved closer to even, reflecting continued uncertainty over the path of monetary policy.
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