Wall Street paused from record levels on Thursday as investors weighed mixed earnings results across major companies and watched oil prices rise on Strait of Hormuz disruption risk tied to the war with Iran.
The S&P 500 fell 0.4% and halted a weekslong rally that had erased its earlier losses and carried it to all-time highs. The Dow Jones Industrial Average dipped 179 points, or 0.4%, while the Nasdaq composite dropped 0.9% from its own record.
Tesla pressured the market after the stock sank 3.6% even though the company reported better results for the quarter than analysts expected. Investors instead focused on a jump in Tesla’s forecast for spending this year as it builds factories to make robots and other products. Elon Musk said, “You should expect to see a very significant increase in capital expenditures,” and added, “but I think well justified for a substantially increased future revenue stream.”
Other company results also shaped sector performance. ServiceNow fell 17.7% despite reporting quarterly results that matched analysts’ expectations, as the company faced pressure along with much of the broad software industry amid worries that AI-powered rivals could undercut its business.
Oil moved in tandem with the geopolitical backdrop. A ceasefire remained in place between the United States and Iran, but tankers in the Persian Gulf were not able to get through the narrow waterway off Iran’s coast and deliver crude to customers. On Thursday, the U.S. military seized another tanker tied to the smuggling of Iranian oil, a day after Iran’s paramilitary Revolutionary Guards took control of two vessels in the strait. President Donald Trump also said Thursday he ordered the U.S. military to “shoot and kill” Iranian boats that deploy mines to gum up traffic in the strait.
The price action was sharp: Brent crude for June rose 3.1% to settle at $105.07 after trading above $107 at one point, and the equity selloff accelerated as the move peaked. Brent for July settled at $99.35 after getting as high as $101, with the market’s losses swinging intraday before partially reversing.
Higher oil costs weighed particularly on airlines, with stocks diverging after earnings reports. American Airlines Group rose 2.4% after reporting profit and revenue for the quarter above analysts’ expectations, with the company saying demand was strong and that it saw the nine best weeks for revenue intake in its 100-year history. Southwest Airlines lost 4.1% after reporting weaker quarterly results than analysts expected, and it said it would not provide an updated forecast for profit this year because of “the ongoing macroeconomic uncertainty.”
IBM also fell, dropping 8.3% even though it reported better profit and revenue than expected. Investors focused on discouraging numbers underneath the surface, including decelerating growth in trends for its software business. Paramount Skydance fell 4.5% after Warner Bros. Discovery shareholders approved selling the business to Paramount, while Warner Bros. Discovery sank 1.6%.
Texas Instruments helped limit declines for the broader index after it topped analysts’ expectations for profit in the latest quarter. CEO Haviv Ilan said the semiconductor company is benefiting from growth led by industrial and data center customers, and its 19.4% rise was the strongest factor supporting the S&P 500.
Overall, the S&P 500 fell 29.50 points to 7,108.40, the Dow fell 179.71 points to 49,310.32, and the Nasdaq declined 219.06 points to 24,438.50. In bond markets, the yield on the 10-year Treasury rose to 4.32% from 4.30% late Wednesday as oil prices accelerated.
Trading moves spread abroad as indexes fell across much of Europe and Asia, including Hong Kong’s Hang Seng and Japan’s Nikkei 225. South Korea’s Kospi rose 0.9% after the government reported better-than-expected economic growth for the start of the year, supported by strong exports, particularly computer chips used in the AI boom, while SK Hynix said its revenue for the quarter jumped more than analysts expected largely on AI-related demand.