Major indexes slip after new incidents in the Strait of Hormuz raise concerns about energy supply and global stability.
By yourNEWS Media Newsroom
U.S. equities closed lower Monday, with the S&P 500 pulling back from recent record highs as escalating tensions in the Middle East unsettled investors despite strong corporate earnings momentum.
The downturn followed reports of an explosion aboard a South Korean merchant vessel operating in the Strait of Hormuz, reinforcing concerns that the waterway remains volatile even as the United States attempts to restore safe passage.
Additional developments contributed to market unease. Iranian officials said a U.S. warship was forced to turn back after approaching the strait, while authorities in the United Arab Emirates reported a fire at an oil installation following a drone strike.
The incidents renewed focus on geopolitical risks after both the S&P 500 and the Nasdaq Composite reached record levels at the end of last week, supported by stronger-than-expected first-quarter earnings.
“With the market at all-time highs, there’s not a lot of room for error, and it feels like the kind of big asymmetric risk is still to the downside, even if it’s maybe not the most probable outcome that we get back into a hot war,” said Ross Mayfield of Baird Private Wealth Management.
Energy-related stocks moved higher as oil prices reacted to the latest confrontations, while broader indexes declined. According to preliminary figures, the S&P 500 fell 28.37 points, or 0.39%, to 7,201.75. The Nasdaq Composite dropped 43.78 points, or 0.17%, to 25,070.67, and the Dow Jones Industrial Average declined 549.79 points, or 1.12%, to 48,946.86.
Despite the pullback, earnings expectations remain strong. Companies in the S&P 500 are projected to deliver aggregate growth of approximately 28% year over year for the first quarter, up from earlier estimates of 14%.
Much of the optimism has been driven by large technology firms, while Warren Buffett’s Berkshire Hathaway reported it has been a net seller of stocks for 14 consecutive quarters, a trend closely monitored by investors.
Individual stock movements added to market activity. GameStop shares declined after the company proposed acquiring eBay in a deal valued at roughly $56 billion, while eBay’s stock rose.
Logistics firms FedEx and United Parcel Service both fell after Amazon announced plans to expand its logistics services to outside businesses.
Elsewhere, Palantir shares climbed ahead of its earnings report, while Norwegian Cruise Line declined after lowering its annual forecast, citing higher fuel costs linked to the Middle East situation.
The broader selloff pushed the Dow Jones Transportation Average to its lowest level in nearly a month, reflecting the sensitivity of shipping and travel sectors to rising energy prices and geopolitical uncertainty.