Wall Street Retreats From Record Highs as Oil Surge and Corporate Signals Rattle Investor.

By Zoey.

U.S. stocks pulled back from historic highs on Thursday, as investors grappled with a mix of uneven corporate earnings and renewed geopolitical tensions that sent oil prices sharply higher. The retreat marked a pause in a sustained rally that had recently lifted major indexes to record levels, fueled by optimism that markets had weathered the economic fallout from the conflict involving Iran.

The S&P 500 slipped 0.6%, reversing part of its recent gains after a run that had erased earlier losses tied to the conflict and pushed the benchmark index into uncharted territory. The Dow Jones Industrial Average declined by 246 points, or 0.5%, while the Nasdaq composite dropped 1.1%, a day after closing at a record high.

Investor sentiment was weighed down in part by declines in major technology and growth stocks, with Tesla among the most significant drags on the market. Shares of the electric vehicle maker fell 4% despite the company reporting quarterly results that exceeded analysts’ expectations. Market participants instead focused on the company’s sharply increased spending outlook, as it ramps up investments in new manufacturing capacity for robotics and other emerging technologies.
Chief Executive Elon Musk signaled a substantial rise in capital expenditures in the coming year, framing the spending as necessary to support long-term revenue growth. However, the scale of the anticipated investment appeared to unsettle investors concerned about near-term profitability and cash flow.

The software sector also faced pressure, highlighted by a steep drop in ServiceNow, which plunged 17.6%. While the company delivered quarterly results in line with expectations, concerns lingered about intensifying competition from artificial intelligence-driven platforms that could disrupt its business model. The broader software industry has increasingly come under scrutiny as AI capabilities expand rapidly, challenging established providers.
Energy markets added another layer of volatility. Oil prices surged amid growing uncertainty surrounding the Strait of Hormuz, a critical chokepoint for global crude shipments. Although a ceasefire between the United States and Iran remained in effect, disruptions to tanker traffic heightened fears of supply constraints.

Tensions escalated further following reports of military actions in the region. U.S. forces seized a tanker allegedly linked to Iranian oil smuggling, while Iranian Revolutionary Guard units reportedly took control of two vessels in the strategic waterway. President Donald Trump issued a stark warning, stating that U.S. forces had been instructed to respond aggressively to any Iranian attempts to obstruct maritime traffic.

The price of Brent crude for June delivery rose 3.1% to settle at $105.07 per barrel, briefly surpassing $107 during trading. That spike coincided with a sharper sell-off in equities, underscoring the sensitivity of financial markets to energy price fluctuations. The more actively traded July contract closed at $99.35 after earlier climbing above $101.

Rising fuel costs weighed heavily on airline stocks, though performance within the sector was mixed. American Airlines Group edged up 1.3% after reporting stronger-than-expected quarterly profit and revenue, supported by robust travel demand. The carrier noted that it had recorded nine of the highest revenue-generating weeks in its century-long history.

In contrast, Southwest Airlines fell 4.2% after posting weaker results and declining to provide updated profit guidance, citing ongoing macroeconomic uncertainty. The divergence reflected broader concerns about how sustained high fuel prices could impact airline profitability.
Other notable decliners included IBM, which dropped 8.4% despite surpassing earnings and revenue forecasts. Investors appeared focused on slowing growth within segments of its software business, raising questions about the company’s longer-term momentum.

Media and entertainment stocks also faced pressure. Paramount Skydance shares fell 5.6% following shareholder approval for a deal involving Warner Bros. Discovery, whose own stock slipped 1%. The transaction has drawn attention as part of a broader wave of consolidation in the media industry.

Amid the declines, Texas Instruments stood out as a rare bright spot. The semiconductor company’s shares surged 17.4% after it reported results that comfortably exceeded expectations. Strong demand from industrial and data center customers, particularly those tied to the artificial intelligence boom, helped drive the performance. The company’s upbeat forecast for the coming quarter further bolstered investor confidence.

International markets mirrored the cautious mood seen on Wall Street. Major indexes across Europe and Asia closed lower, with Hong Kong’s Hang Seng falling 0.9% and Japan’s Nikkei 225 declining 0.7%. South Korea’s Kospi index bucked the trend, rising 0.9% after stronger-than-expected economic growth data highlighted resilience driven by exports, especially in semiconductor-related sectors.

Chipmaker SK Hynix reported a surge in revenue, fueled by AI-driven demand.
In the bond market, yields edged higher as oil prices climbed. The yield on the 10-year U.S. Treasury note rose to 4.32%, up from 4.30% the previous day, reflecting shifting expectations around inflation and interest rates.

Economic data released earlier in the day painted a mixed picture. Initial claims for unemployment benefits ticked slightly higher but remained at levels historically associated with a healthy labor market. Meanwhile, a preliminary survey of U.S. business activity indicated that economic growth may be gaining modest traction after a sluggish period in March.

The combination of geopolitical uncertainty, rising energy costs, and uneven corporate performance has introduced a more cautious tone to markets that had recently been buoyed by optimism. Investors now face the challenge of assessing whether the recent rally can be sustained amid these evolving risks.