Wall Street’s record run wobbled Thursday as traders reacted to volatile oil prices tied to shifting expectations for talks aimed at ending the Iran war. U.S. stock benchmarks fell from their highs after Brent crude yo-yoed through the session, reflecting both hopes for a deal and doubts about whether those proposals would produce quick progress.
The pricing swings tracked market attention to whether an agreement could reopen the Strait of Hormuz, a shipping route that has been closed for much of the war and has left oil and gasoline far more expensive than before it began. Brent had been above $115 earlier this week, but it fell to near $96 a barrel during the day before rebounding, only to weigh on equities as prices moved again.
Iran said it was reviewing the latest U.S. proposals to end the war, a development that helped steer expectations over the near term. Later in the session, a spokesperson for Pakistan’s Foreign Ministry said, “We expect an agreement sooner rather than later,” a remark that came as Pakistan mediates the talks between Washington and Tehran and briefly pushed Brent lower before the market reversed again.
Brent later erased much of that drop and briefly topped $102, sending stocks lower on Wall Street as traders recalibrated the odds of a near-term outcome. The session also reflected broader caution from prior swings during the war, when markets had rallied on expectations of a reopening of the Strait of Hormuz before those hopes faded.
Beyond oil, investors also looked at developments that could affect shipping costs even if a deal moves forward. A shipping data company reported Thursday that Iran has created a government agency to vet and tax vessels seeking passage through the strait, a move that could add costs for fuel.
Corporate results helped cushion the selloff even as rates and energy remained in focus. Datadog jumped 31.3% after its profit results for the latest quarter topped analysts’ expectations, and Albemarle rose 3% after delivering better-than-expected results. Axon Enterprise rallied 10.6% after raising its revenue forecast for the year, citing big growth tied to its counter-drone products.
Some companies fell sharply after their own reports. Whirlpool tumbled 11.9% after reporting much weaker results than analysts expected, and it also announced the largest price increases in a decade for major appliances in North America while accelerating cost cuts amid weaker confidence among U.S. consumers. Shake Shack dropped 28.3% after its quarterly results came in below analysts’ expectations.
McDonald’s stock held steadier, slipping 0.1% after revenue for the latest quarter edged past expectations. The company’s chief executive, Chris Kempczinski, said high gasoline prices and consumer anxiety over the Iran war could dent sales this spring.
In the bond market, Treasury yields rose after oil prices pared their drops. The 10-year Treasury yield climbed to 4.38% from 4.36% late Wednesday, a move that can lift borrowing costs for mortgages and other loans and can put downward pressure on stock valuations, particularly when investors see rates as heading higher for longer.
Trading elsewhere also tilted lower. Indexes in Europe fell after a stronger finish in Asia, with stocks down 1.5% in London and 1.2% in Paris. Japan’s Nikkei 225 surged 5.6% higher as trading resumed in Tokyo after a holiday, recouping gains seen earlier in the week elsewhere in Asia tied to technology shares benefiting from artificial intelligence.
“I think it’s a kind of bubble because buying activity concentrated on leading AI, artificial intelligence stock and semiconductor-related stocks. It’s a situation where only semiconductor stocks are being bought,” said Takashi Hiroki, chief strategist at MONEX.