Key Takeaways
- Dow fell 194 points, or 0.37%, as oil surged above $90 a barrel
- PCE inflation rose 0.4%, below the 0.5% consensus estimate
- US-Iran military escalation reversed peace-deal optimism that drove recent gains
Key Takeaways
Wall Street ended mixed Thursday as softer inflation data was overshadowed by escalating US-Iran hostilities that pushed crude above $90 a barrel.
The Dow Jones Industrial Average fell 194 points, or 0.37%, after renewed US-Iran military strikes sent oil prices sharply higher and reversed earlier gains fueled by cooler-than-expected inflation data. The S&P 500 slipped 0.14% and the Nasdaq Composite edged down 0.24%, paring gains after both indexes closed at records in the prior session.
"The PCE print gives the Fed room to stay patient, but the oil spike is the dominant force today — it's a supply shock that inflation data alone can't address," said Lori Calvasina, head of US equity strategy at RBC Capital Markets.
The personal consumption expenditures price index, the Federal Reserve's preferred inflation gauge, rose 0.4% in April on a seasonally adjusted basis, below the 0.5% economists had forecast. The annual rate held at 3.8%, matching expectations but remaining well above the Fed's 2% target. West Texas Intermediate crude climbed above $90 a barrel and Brent crude topped $96 after Iran's Islamic Revolutionary Guard Corps targeted a US airbase following American strikes on Iranian missile launchers. The White House denied Iranian state television reports that Tehran had agreed to restore commercial traffic through the Strait of Hormuz within a month, and President Donald Trump rejected reports that Washington was nearing a compromise agreement.
The escalation threatens to reverse a week of peace-deal optimism that had driven the S&P 500 to its eighth consecutive weekly gain. With the Strait of Hormuz handling about a fifth of global oil consumption, any sustained disruption could feed into broader price pressures and complicate the Fed's path on rate cuts.
Oil Spike Reshapes Sector Leadership
The S&P 500 energy sector was the top performer as crude prices jumped more than 2%. Airlines and cruise operators, which had rallied earlier in the week on hopes for a diplomatic resolution, gave back some of those gains. United Airlines fell 3%, while Carnival Corp. declined 2.5%. The 10-year Treasury yield edged higher alongside oil, reflecting renewed inflation concerns tied to energy markets. The US dollar index held near 99.19.
Technology stocks showed resilience despite the broader pressure. Snowflake surged about 33% after raising its annual product revenue forecast and announcing a five-year, $6 billion artificial intelligence infrastructure agreement with Amazon Web Services. Marvell Technology also advanced after posting first-quarter results, with shares more than doubling year to date.
Retail stocks provided a partial offset. Dollar Tree climbed after raising its full-year profit forecast, while Best Buy advanced after projecting second-quarter sales above Wall Street estimates.
The S&P 500 remains on track for its ninth consecutive weekly gain, its longest winning streak since December 2023, though Thursday's reversal underscored how quickly the geopolitical backdrop can shift.
This article is for informational purposes only and does not constitute investment advice.
