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U.S. equities retreated from record territory on Thursday, as a wave of mixed corporate earnings and escalating geopolitical tensions weighed on investor sentiment. The pullback marked a pause in a weeks-long rally that had not only erased earlier losses tied to conflict concerns but also pushed major indexes to fresh all-time highs.
The S&P 500 slipped 0.4%, while the Dow Jones Industrial Average fell 179 points, also down 0.4%. The tech-heavy Nasdaq Composite declined 0.9%, retreating from its own recent peak.
A significant drag on the market came from Tesla, which dropped 3.6% despite posting quarterly results that exceeded Wall Street expectations. Investor focus shifted instead to the company’s aggressive spending outlook, as it ramps up investment in robotics and next-generation manufacturing. CEO Elon Musk signaled a “very significant increase” in capital expenditures, positioning the move as a long-term bet on revenue expansion.
Software firm ServiceNow plunged 17.7%, even after delivering results in line with forecasts. The decline reflects broader concerns across the software sector, where artificial intelligence-driven competition is increasingly seen as a disruptive force.
Geopolitical developments added further pressure. Oil prices surged amid rising uncertainty surrounding the Strait of Hormuz, a critical global energy chokepoint. Although a ceasefire between the United States and Iran remains in place, disruptions to tanker traffic and escalating military activity heightened fears of supply constraints. U.S. forces seized another tanker linked to Iranian oil smuggling, while Iranian forces reportedly took control of vessels in the region. President Donald Trump intensified rhetoric, stating that U.S. forces would respond aggressively to threats against maritime traffic.
Brent crude for June delivery climbed 3.1% to $105.07 per barrel, briefly surpassing $107 during the session. The spike in oil prices coincided with a sharp intraday selloff in equities, with the S&P 500 at one point down as much as 1.3% before recovering part of its losses. The more actively traded July contract settled at $99.35.
Rising energy costs created divergence within the airline sector. American Airlines gained 2.4% after reporting stronger-than-expected earnings and highlighting robust travel demand, including its nine strongest weeks of revenue in company history. In contrast, Southwest Airlines fell 4.1% following weaker results and withdrew its full-year profit forecast, citing ongoing macroeconomic uncertainty.
Elsewhere, IBM dropped 8.3% despite beating earnings expectations, as investors focused on slowing growth in its software segment. Media developments also weighed on sentiment, with Warner Bros. Discovery declining 1.6% after shareholders approved the sale of its business to Paramount, whose shares fell 4.5%.
Providing a rare bright spot, Texas Instruments surged 19.4% after comfortably surpassing earnings estimates. CEO Haviv Ilan pointed to strong demand from industrial and data center clients, positioning the company as a key beneficiary of the AI-driven semiconductor cycle.
By the close, the S&P 500 had fallen 29.50 points to 7,108.40, the Dow Jones Industrial Average declined 179.71 to 49,310.32, and the Nasdaq Composite dropped 219.06 to 24,438.50.
Global markets echoed the cautious tone. Hong Kong’s Hang Seng Index fell 0.9%, while Japan’s Nikkei 225 declined 0.7%. In contrast, South Korea’s Kospi rose 0.9%, supported by stronger-than-expected economic growth driven by robust semiconductor exports. SK Hynix reported revenue that exceeded forecasts, fueled by sustained demand linked to artificial intelligence.
In fixed-income markets, the yield on the 10-year U.S. Treasury rose to 4.32% from 4.30% a day earlier, tracking the surge in oil prices.
Economic data offered a mixed but relatively stable backdrop. Weekly jobless claims edged higher but remained at historically healthy levels, while preliminary data from S&P Global indicated a modest improvement in U.S. business activity following near-stagnation in March.