Wall Street dips on Middle East tensions, mixed corporate results

Major U.S. stock indices edged lower on Thursday as investors awaited clearer signals regarding the U.S.-Iran conflict, while mixed corporate earnings reignited concerns over AI's impact on the software sector.

Tehran tightened its grip on the Strait of Hormuz, broadcasting footage of special forces storming a large cargo ship seized on Wednesday. Iran continues to demand that the United States lift the naval blockade imposed on its ports.

While investors have shown remarkable resilience recently, largely ignoring war risks, signs of fatigue are emerging. This has led to brief periods of risk aversion as the market seeks clarity on the conflict's resolution and timing. With oil prices holding above $100 per barrel, the risk of a resurgence in inflation remains a key concern.

Market Performance at 09:46 AM ET

- Dow Jones Industrial Average: Fell 154 points (0.30%) to 49,341.55.

- S&P 500: Decreased 6.61 points (0.10%) to 7,131.08.

- Nasdaq Composite: Dropped 57.27 points (0.26%) to 24,593.45.

Data released Thursday showed a slight increase in weekly jobless claims, though the threat of war-driven price hikes continues to hang over the economy.

Earnings Under the Microscope

Despite a largely strong earnings season so far, investors are questioning the reliability of these results as a future indicator, given they only reflect one month of Middle East disruptions.

Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management, noted: "Earnings results do not yet reflect the impact of the energy supply shock." He added that while an oil shock is a drag on growth, there is strong structural support, and the market remains comfortable as long as a path to de-escalation exists.

Pressure on Technology Stocks

- IBM: Shares tumbled 12% after Q1 revenue growth slowed due to weakness in its software business, sparking fears that AI tools are disrupting traditional software business models.

- Microsoft & Adobe: Shares fell 2.6% and 7.3%, respectively.

- S&P 500 IT Sector: Declined 0.6%, acting as the primary drag on the index, though a 1.8% gain in the Utilities sector helped limit broader losses.

Notable Stock Movements

- Tesla: Dropped 3.8% after increasing its 2026 spending plans to over $25 billion, as Elon Musk pivots heavily toward AI, robotics, and chips.

- Lockheed Martin: Slipped 3.7% following lower-than-expected Q1 profits.

- Texas Instruments: Jumped 10.5% after forecasting Q2 revenue and profit that beat Wall Street estimates.

- Cannabis Stocks: Tilray Brands and Canopy Growth rose 5.8% and 6.5%, respectively, after the U.S. Department of Justice reclassified state-licensed marijuana as a less dangerous drug.

In terms of market breadth, advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE and a 1.51-to-1 ratio on the Nasdaq. The S&P 500 recorded 28 new 52-week highs and 5 new lows, while the Nasdaq saw 74 new highs and 41 new lows.