Wall Street traded mixed on Thursday as investors weighed softer-than-expected monthly inflation data against escalating geopolitical tensions between the United States and Iran, which pushed oil prices sharply higher.
The Dow Jones Industrial Average fell 194 points, or 0.37%, while the S&P 500 and Nasdaq Composite fell 0.14% and 0.24%, respectively.
Markets initially found some relief after fresh inflation data showed price pressures cooled slightly in April compared with economists’ expectations.
The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred inflation gauge, rose 0.4% on a seasonally adjusted basis during the month.
That was below economists’ forecasts for a 0.5% increase.
The annual inflation rate came in at 3.8%, matching expectations but remaining well above the Federal Reserve’s long-term 2% target.
The data helped ease concerns that inflation pressures were accelerating further, though investors remained cautious as energy prices climbed again amid renewed Middle East tensions.
Oil prices surge as US-Iran tensions escalate
Investor sentiment weakened after reports that Iran’s Revolutionary Guard targeted a US airbase following fresh American military strikes against a site in Iran.
The developments reduced hopes for an imminent diplomatic agreement between Washington and Tehran.
Oil prices jumped more than 2% during the session as concerns grew around potential disruptions involving the Strait of Hormuz, one of the world’s most critical oil shipping routes.
West Texas Intermediate crude futures rose above $90 per barrel, while Brent crude futures climbed above $96.
The White House also denied reports from Iranian state television suggesting Tehran had agreed to restore commercial traffic through the Strait of Hormuz within one month as part of a potential deal with the US.
President Donald Trump additionally rejected reports that Washington was nearing a compromise agreement with Iran.
Treasury yields edged higher alongside the rise in oil prices, reflecting renewed inflation concerns tied to energy markets and geopolitical uncertainty.
AI and earnings momentum continue supporting markets
Despite geopolitical uncertainty, investor optimism surrounding artificial intelligence and corporate earnings growth continued to help support broader market sentiment.
The major indexes entered Thursday near record highs after all three closed at all-time highs during the previous session.
The S&P 500 also remained on track for its ninth consecutive weekly gain, marking its longest winning streak since December 2023.
Several technology and AI-related companies posted strong gains following earnings and guidance updates.
Snowflake surged roughly 33% after the cloud data company raised its annual product revenue forecast and announced a five-year, $6 billion AI infrastructure agreement with Amazon Web Services.
Marvell Technology also rose after posting first-quarter results, with shares more than doubling so far this year amid continued AI-driven demand.
Other technology-related companies, including Datadog and MongoDB, also advanced during the session.
Outside technology, retail stocks posted strong moves following earnings reports.
Dollar Tree climbed after raising its full-year profit forecast, while Best Buy surged after projecting second-quarter sales above Wall Street expectations.
Drone-related companies also rallied after a Wall Street Journal report said the Trump administration was discussing potential funding support for drone firms.
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