The S&P 500 slipped 0.4% on Thursday as a surge in oil prices and weakness in tech stocks pulled the market back from record levels, ending a weeks-long rally that had erased all losses tied to the Iran conflict.
Benchmark crude prices jumped on renewed fears over shipping through the Strait of Hormuz, with Brent crude for June delivery briefly topping $107 a barrel before settling at $105.07, up 3.1% on the day. The spike coincided with a sharp intraday pullback in equities, though the S&P 500 recovered half its loss by the close. The more widely traded July contract settled at $99.35 after reaching as high as $101.
Technology shares bore the brunt of the retreat, with the Nasdaq composite falling 0.9% from its record high. The Technology Select Sector SPDR ETF (XLK) appeared poised to break a 16-day winning streak, lagging behind all ten of its sector peers. In contrast, the iShares Semiconductor ETF (SOXX) marked its 12th straight intraday high and was on track for a 17th consecutive daily gain, underscoring a divergence within tech as investors favored chipmakers over broader software and hardware names.
Individual tech stocks highlighted the split. Tesla shares fell 3.6% despite reporting better-than-expected quarterly results, as investors zeroed in on Elon Musk’s warning of a “very significant increase” in capital spending to fund factories for robots and other products. Software firm ServiceNow dropped 17.7% even after matching earnings estimates, weighed down by concerns that AI-powered rivals could erode its market position.
For more on this story, see Most Oversold S&P 500 Stocks for Potential Rebounds.
Outside of tech, industrial and commodity-linked sectors showed resilience. Caterpillar, CSX, Eaton, and Steel Dynamics all posted intraday record highs, as did airlines with mixed results. American Airlines rose 2.4% after beating profit and revenue forecasts and citing its nine best revenue weeks in a century of operations. Southwest Airlines fell 4.1% on weaker-than-expected quarterly results, illustrating how fuel costs are splitting the airline sector amid higher oil prices.
The oil market’s move was driven by escalating tensions in the Persian Gulf, where a U.S.-Iran ceasefire remains in place but commercial shipping faces disruption. The U.S. Military seized another tanker linked to Iranian oil smuggling on Thursday, a day after Iran’s Revolutionary Guards took control of two vessels in the strait. President Trump also said he had ordered the military to “shoot and kill” Iranian boats deploying mines to disrupt traffic, though no such action was reported.
Last time oil prices spiked amid Gulf tensions — in early 2024 following Houthi attacks on Red Sea shipping — energy stocks led gains while rate-sensitive sectors declined, a pattern that echoes today’s split between defensives and growth stocks.
Why did tech stocks split despite the sector-wide decline?
Investors are favoring semiconductor companies, which benefit from steady demand and pricing power, while software firms face pressure from AI-driven competition and concerns over rising capital expenditures, as seen in Tesla and ServiceNow’s contrasting reactions to their earnings.
How significant is the oil price move in the context of recent market trends?
The brief spike above $107 for Brent crude ended a period of relative calm in energy markets and contributed to the S&P 500’s first meaningful pullback in weeks, though the market recovered quickly, suggesting traders view the risk as episodic rather than structural.
