US stocks moved lower Thursday as rising oil prices, concerns over the Iran conflict and renewed inflation fears pressured investors across S&P 500, Dow Jones Industrial Average and the broader New York Stock Exchange.
The S&P 500 fell 0.3% and headed toward its fourth decline in five sessions after recently hitting a record high. The Dow Jones dropped roughly 110 points, while the Nasdaq Composite slipped 0.4%.
Markets were rattled primarily by another jump in crude oil prices as uncertainty surrounding Iran and the Strait of Hormuz continued to fuel concerns about global energy supply disruptions.
Oil prices jump as Iran tensions intensify
Crude prices climbed sharply again Thursday after reports suggested Iran may continue asserting control over maritime traffic through the Strait of Hormuz. Brent crude rose 2.6% to $107.76 per barrel, while U.S. West Texas Intermediate crude topped $100.
“While geopolitical risks could still flare up, the more pressing issue appears to be macro-related,” Bret Kenwell at eToro told Bloomberg. “Elevated energy prices continue to fuel concerns about longer-term inflation. Markets will have plenty to digest in the coming weeks and months.”
Concerns over inflation
The oil rally pushed Treasury yields higher again, reviving concerns that the Federal Reserve may be forced to keep interest rates elevated – or even raise them further. The yield on the 10-year Treasury climbed to 4.61% from 4.57% a day earlier.
Higher yields typically pressure stocks because they increase borrowing costs for businesses and consumers while making safer investments like bonds more attractive.
Investors also worried that higher financing costs could slow spending on artificial intelligence infrastructure projects that have been supporting much of the market’s recent momentum.
“With inflation concerns unlikely to ease meaningfully until a clearer path toward ending the Middle East conflict emerges, we expect yield volatility to persist in the near term,” Ulrike Hoffmann-Burchardi at UBS Chief Investment Office said, per Bloomberg.
Jamie Dimon warns rates could go much higher
Adding to market anxiety, Jamie Dimon issued a stark warning about the future of interest rates.
“They could be much higher than they are today,” the JPMorgan chief executive told Bloomberg Television. “We may have gone from a saving glut to not enough savings.”
Nvidia earnings fail to spark rally
Despite another strong earnings report from Nvidia, AI-related stocks struggled to lift the broader market. Nvidia beat Wall Street expectations on both profit and revenue while also issuing stronger-than-expected guidance for the current quarter.
“The buildout of AI factories — the largest infrastructure expansion in human history – is accelerating at extraordinary speed,” CEO Jensen Huang said.
Still, Nvidia shares fell nearly 2% as investors appeared to lock in profits following the stock’s massive rally over the last year.
Walmart drops after warning on profits
Retail giant Walmart was among the market’s biggest losers Thursday. The company reported solid revenue growth but issued weaker-than-expected profit forecasts, warning that higher fuel costs and inflationary pressures are beginning to hurt margins.
Shares of Walmart dropped nearly 8%.
Meanwhile, Ralph Lauren jumped more than 11% after delivering stronger-than-expected earnings and revenue.
Economic data sends mixed signals
Fresh labor market data initially pushed yields higher after weekly unemployment claims unexpectedly declined, signaling layoffs remain relatively limited.
However, separate business activity data painted a more mixed picture.
An S&P Global survey showed weaker-than-expected growth among U.S. services companies while manufacturing activity improved.
“The damaging economic impact from the war in the Middle East is becoming increasingly evident in the business surveys,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Global markets mixed as Asia rallies
International markets delivered mixed performances Thursday. South Korea’s Kospi surged 8.4%, powered by gains in technology stocks after Samsung Electronics reached a labor agreement that avoided a strike.
Samsung shares jumped 8.5%, while chipmaker SK Hynix soared 11.2%. Japan’s Nikkei 225 rose 3.1%, but Chinese markets struggled, with Hong Kong falling 1% and Shanghai sliding 2%.