NEW YORK: Wall Street’s main indexes were flat on Thursday, as investors awaited clear signals on the US-Iran war, while a batch of mixed earnings reignited concerns about AI-driven disruption across the software sector.
Iran tightened control over the Strait of Hormuz as Tehran released footage of its commandos storming a huge cargo ship that they claimed to have seized on Wednesday, while demanding the US lift its naval blockade on Iranian ports.
Investors keen to look past war-related risks have shown strong resilience in recent days, but some fatigue has set in, leading to brief episodes of risk aversion, as they await more clarity on how and when the conflict may ultimately be resolved.
With oil prices over USD100 a barrel, the risk of an inflation flare-up also remains.
“Our advice to investors would be not to read the headlines,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
“While there are short-term, headline-driven sell-offs time and again, when cooler heads prevail and the market returns to looking at fundamentals, it sees what we see, which is a really strong economy and really strong earnings.”
At 11:45 a.m. ET, the Dow Jones Industrial Average fell 99.59 points, or 0.20 percent, to 49,388.60 and the Nasdaq Composite lost 52.77 points, or 0.21 percent, to 24,604.80.
The S&P 500 lost 2.17 points, or 0.03 percent, after hitting an all-time high.
Data on Thursday showed that the number of Americans filing claims for unemployment benefits increased only marginally last week, but risks from war-driven higher prices still threaten the economy.
S&P Global’s flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, increased this month after almost stagnating in March, but the improvement was largely due to what it said was “stock building in the face of concerns over supply availability and price hikes.”
“We thought earnings would be the anchor for markets this year, and I think thus far, the verdict is that it’s the right anchor,” Samana said.
The earnings season has been largely strong so far, but because the results reflect only one month of disruption from the Middle East conflict, some are questioning how dependable they are as a gauge of what lies ahead.
“The earnings themselves don’t reflect the impact of the energy supply shock,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.
IBM slumped 8 percent after revenue growth slowed in the first quarter on weakness in its software business.
The results revived concerns that the software sector’s traditional business models could be upended by new AI tools.
The S&P 500 information technology sector fell 0.3 percent. Weakness in information technology stocks also sent the Dow and the Nasdaq lower.
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