Wall Street ended lower on Thursday as investors paused after this week’s record-setting rally, weighing a fresh round of corporate earnings alongside renewed uncertainty over developments in the Middle East.
The Dow Jones Industrial Average dropped 454 points, or 0.83%, while the S&P 500 slipped 0.18%.
The Nasdaq Composite edged 0.04% lower as weakness in technology stocks offset broader optimism that had driven markets to record highs earlier in the week.
Investors also monitored geopolitical developments surrounding the Strait of Hormuz and looked ahead to Friday’s closely watched US nonfarm payrolls report for further clues on the Federal Reserve’s interest rate path.
Tech earnings disappoint despite solid results
Technology stocks were among the biggest drags on the market as investors reacted negatively to several quarterly earnings reports and forward guidance.
Western Digital and Sandisk both declined after reporting quarterly results that exceeded Wall Street expectations but failed to satisfy elevated investor expectations following strong gains earlier this year.
Western Digital fell around 12%, while Sandisk lost about 5%.
Software stocks also came under pressure. AppLovin tumbled roughly 20% after reporting mixed quarterly results, while Datadog posted one of the session’s steepest declines after warning that revenue growth is expected to slow in the third quarter.
Salesforce also weighed on the Dow after shares fell about 3% following the company’s leadership reshuffle.
Despite the weakness in individual technology names, the broader earnings season remained supportive.
According to LSEG data, 84.8% of the 382 S&P 500 companies that had reported earnings through Wednesday morning exceeded analyst expectations, well above the long-term average beat rate of 68%.
SpaceX, meanwhile, recovered from early losses to close higher despite the expiration of its post-IPO lock-up period, which had been expected to increase selling pressure as early investors became eligible to sell shares.
Middle East developments keep investors cautious
Geopolitical developments remained a major focus for financial markets.
Oil prices climbed after reports that an Iranian parliamentary committee is reviewing draft legislation that could prohibit US, Israeli and other vessels deemed hostile from transiting the Strait of Hormuz.
Brent crude settled at $82.49 per barrel, up 3.83%, while US West Texas Intermediate crude rose 2.75% to settle at $77.29 per barrel.
The proposed legislation added uncertainty to ongoing diplomatic efforts involving Iran and Oman, which have been working toward an agreement to reopen the strategic shipping route.
Reports indicated that a temporary arrangement under discussion would allow vessels to transit the strait without fees or tolls.
The rise in oil prices reversed some of the optimism seen earlier this week, when hopes for progress in negotiations had eased inflation concerns and supported gains in equities.
Labor market data and Fed outlook in focus
Investors also assessed fresh economic data ahead of Friday’s employment report.
Weekly jobless claims showed the number of Americans filing for unemployment benefits increased slightly, offering another snapshot of labor market conditions before the release of July’s nonfarm payrolls report.
The employment data is expected to play an important role in shaping expectations for Federal Reserve policy after Chair Kevin Warsh has provided limited forward guidance in recent weeks.
The post Dow falls 454 points as earnings, Hormuz tensions weigh on Wall Street appeared first on Invezz
