U.S. stocks opened lower on Thursday, as investors kept tabs on tensions in the Middle East and gauged an incoming raft of corporate results.
At 09:32 ET (13:32 GMT), the benchmark S&P 500 index was down 0.2% to 7,121.71 points, the tech-heavy NASDAQ Composite slipped 0.4% to 24,553.56 points, and the blue-chip Dow Jones Industrial Average shed 0.3% to 49,330.21 points.
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The main indices on Wall Street climbed on Wednesday, moving up towards fresh record highs. Relief around the extension of a U.S.-Iran ceasefire shortly before it was due to expire was further bolstered by resilient company profits in the face of war-linked headwinds.
“[A]n accord is largely anticipated by the market, which is why it wouldn’t be shocking for confirmation of a deal to spark a ‘sell the news’ reaction,” analysts at Vital Knowledge said in a note. “That said, while Iran may be losing its potency as an upside catalyst, the [first-quarter] earnings season, which is about [roughly] 1.5 weeks old at this point, has been quite encouraging, although there is still a lot left to go.”
Uncertainty surrounded the future of potential peace talks between the U.S. and Iran, as anxiety around the Strait of Hormuz persisted despite President Donald Trump’s announcement of an extended ceasefire earlier this week.
Tehran attacked three ships in the strait, seizing two of them. Iranian officials said the move was in response to an American blockade of the country’s ports, as well as the recent seizure of an Iranian-flagged ship.
A day earlier, Trump announced in a social media post that a two-week ceasefire deal with Iran had been extended just hours before it was due to expire. He said the extension came at the request of Pakistan, which has served as a mediator between Washington and Tehran, adding that the truce would be in effect "until such time as" Iranian officials present a "unified proposal" for peace.
However, leaders from both sides have indicated that they stand ready to resume hostilities.
Mediators from Pakistan, Turkey and Egypt were racing to salvage peace talks between the U.S. and Iran, including arranging a potential meeting as soon as Friday, the Wall Street Journal reported, citing officials familiar with the matter.
The U.S. and Iran were exchanging messages via third parties, although little progress has been made, the WSJ said.
With signs pointing to persistent oil supply disruptions through the Strait of Hormuz, a crucial shipping conduit for a fifth of the world’s oil, crude prices once again topped $100 a barrel. Brent crude futures, the global oil benchmark, were last up 0.7% to $102.60 a barrel.
Although oil prices have eased back from an initial spike after the start of the war in late February, they are still well above pre-conflict levels. Worries have abounded that the energy shock could trigger a spike in inflationary pressures and a slowdown in global growth.
Earnings parade marches on Even as headwinds from the Iran war loom, Corporate America has delivered a broadly solid start to the first quarter earnings season. According to data from Bloomberg, nearly 80% of the S&P 500 firms reporting first-quarter earnings have topped analysts’ expectations.
Tesla delivered a quarterly top- and bottom-line beat, as its core automotive business fared better than feared in the quarter.
But shares of the company fell nearly 3% following the opening bell, after the electric vehicle maker outlined plans to shell out over $25 billion this year to fund a pivot into robotics and autonomous driving. In January, Tesla forecast annual capital expenditures of $20 billion.
Elsewhere, IBM shares slumped 9.4% following a slowdown in revenue growth due to weakness at its software division. Comcast, American Express, Lockheed Martin and American Airlines are also on the docket today.
On the economic data front, a fresh look at U.S. business activity during April is due shortly after the opening bell. It could provide a glimpse into how American companies are grappling with price pressures from the conflict in the Middle East.
Additionally, the U.S. Department of Labor said the number of Americans filing for initial jobless claims in the past week edged up by 214k, higher than the expected figure of 211k. Continuing claims ticked higher to 1.821 million.
