Stocks slipped on Thursday as software shares dropped and oil prices climbed above $105 a barrel, with investors weighing renewed tensions in the Strait of Hormuz against a surprisingly resilient tech sector.
The S&P 500 fell 0.41% to close at 7,108.40 after touching an intraday record, whereas the Nasdaq Composite declined 0.89% to 24,438.50 despite too hitting a session high. The Dow Jones Industrial Average lost 179.71 points, or 0.36%, to finish at 49,310.32. Losses were led by IBM and ServiceNow, which tumbled more than 8% and nearly 18% respectively after quarterly results, even as IBM beat earnings estimates. Other software names followed suit, with Microsoft down about 4%, Palantir off more than 7%, and Oracle lower by roughly 6%.
Oil prices rose on reports of Iranian naval activity in the Gulf, with Brent crude futures settling above $105 per barrel after Israel’s N12 news said Iran’s parliament speaker had resigned from negotiations — a claim CNBC could not confirm. Reuters cited Iran’s Mehr news agency saying air defenses had engaged “hostile targets” in Tehran, following earlier reports of activated batteries in the capital. The Globe and Mail noted Friday that oil traded above $107, up more than 18% for the week and on track for its biggest weekly gain since the war began in March.
The market’s reaction reflects a split between sectors sensitive to geopolitical risk and those benefiting from underlying strength. Chris Kampitsis of Barnum Financial Group said stocks are “trying to find their footing after an incredible rebound off of the March lows” and expect to trade in a range until the next catalyst emerges. He added that while investors are becoming less reactive to Iran headlines, the conflict still weighs on sentiment as it has evolved into a naval standoff, with both the U.S. And Iran seizing commercial vessels.
For more on this story, see S&P 500 drops as oil prices surge and tech stocks retreat.
President Donald Trump ordered the Navy to “shoot and kill any boat” laying mines in the Strait of Hormuz, writing on Truth Social that “there is to be no hesitation.” His comments came days after he said he would indefinitely extend a two-week ceasefire with Iran to allow for further talks, citing a “seriously fractured” Tehran government. The Globe and Mail’s Rory McPherson noted the week ended with “an escalation after a de-escalation,” dampening sentiment, but added that fundamentals remain strong and markets could be underestimating upside potential.
Jim Caron of Morgan Stanley Investment Management pointed to strong earnings as an overlooked factor, saying investors focus too much on downside risks from the Iran war and not enough on the market’s tail risk to the upside. He noted the S&P 500 tech index has risen 16% in April alone, on pace for its best month since 2002. Meanwhile, semiconductor strength persisted, with SOXX extending its winning streak even as the broader Technology Select Sector SPDR ETF (XLK) faced the risk of snapping a 16-day gain streak.
This follows our earlier report, Wall Street Gains Amid Oil Price Surge and US-Iran Tensions.
Currency markets also reacted, with the dollar on track for its first weekly gain in three weeks as yen hovered near 160 to the dollar. Japanese Finance Minister Satsuki Katayama warned authorities could seize “decisive” action against speculative moves in forex, reiterating that Japan retains a free hand to intervene after past efforts proved effective.
Why did software stocks fall despite strong earnings from some companies?
IBM beat on both revenue and profit but held its full-year guidance, which disappointed investors expecting an upgrade. ServiceNow cited subscription revenue growth hindered by the Middle East conflict, dragging its shares down nearly 18% and pressuring other software names like Microsoft, Palantir, and Oracle.
How can oil prices rise while some tech sectors continue to gain?
Oil gains are driven by fears of supply disruption from Iran-U.S. Naval tensions in the Strait of Hormuz, while semiconductor and hardware stocks benefit from strong underlying demand and earnings, creating a divergence between geopolitically sensitive and fundamentals-driven sectors.
