Wall Street’s main indices were largely flat on Thursday as investors awaited clearer signals on the ongoing US-Iran conflict, even as mixed corporate earnings revived concerns around AI-driven disruption in the software sector.
Iran tightened its grip over the Strait of Hormuz, releasing footage of commandos storming a large cargo ship it claimed to have seized on Wednesday, while pressing the United States to lift its naval blockade on Iranian ports.
Investor Fatigue Sets In
Markets, which have shown resilience in recent sessions despite escalating tensions, appeared to lose some momentum, with signs of fatigue emerging. Investors are increasingly cautious as they look for clarity on how and when the conflict might be resolved.
With oil prices holding above $100 a barrel, concerns over a potential inflation spike continue to weigh on sentiment.
“Our advice to investors would be not to read the headlines,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
“While there are short-term, headline-driven sell-offs time and again, when cooler heads prevail and the market returns to looking at fundamentals, it sees what we see, which is a really strong economy and really strong earnings.”
Indices Edge Lower After Record High
At 11:45 AM ET, the Dow Jones Industrial Average fell 99.59 points, or 0.20%, to 49,388.60, while the Nasdaq Composite dropped 52.77 points, or 0.21%, to 24,604.80.
The S&P 500 slipped 2.17 points, or 0.03%, after touching an all-time high earlier in the session.
Economic Data Offers Mixed Signals
Fresh data showed that US jobless claims rose only marginally last week. However, concerns remain that war-driven price pressures could impact the broader economy.
S&P Global’s flash US Composite PMI Output Index, which tracks manufacturing and services activity, rose this month after nearly stagnating in March. The improvement, however, was largely attributed to “stock building in the face of concerns over supply availability and price hikes.”
Earnings In Focus As AI Fears Resurface
Earnings remain central to market direction, though questions persist over how reflective current results are of the evolving geopolitical landscape.
“We thought earnings would be the anchor for markets this year, and I think thus far, the verdict is that it’s the right anchor,” Samana said.
However, analysts caution that results so far reflect only a limited period of disruption.
“The earnings themselves don’t reflect the impact of the energy supply shock,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.
IBM shares slumped 8% after first-quarter revenue growth slowed due to weakness in its software business, reigniting concerns that traditional models could be disrupted by emerging AI tools.
The S&P 500 information technology sector declined 0.3%, dragging both the Dow and Nasdaq lower. Tesla shares also fell 2.6% after the company raised its annual spending plan to more than $25 billion.
