NEW YORK: Wall Street’s main indexes declined on Thursday as resurgent oil prices reignited inflation fears and pressured equities after a Reuters report signaled Tehran’s hardening stance in talks with Washington.
Brent crude futures reversed earlier losses and rose 2.6 percent to USD107.75 a barrel.
Oil had dipped earlier in the session on hopes that diplomatic efforts could diffuse tensions, but prices turned higher after Reuters reported Iran’s Supreme Leader Ayatollah Mojtaba Khamenei had issued a diktat that the country’s near-weapons-grade uranium not be shipped abroad.
The report diminished expectations for progress in US-Iran talks and revived concerns about a prolonged disruption around the Strait of Hormuz, a critical route for global oil supplies.
The yield on the benchmark 10-year US Treasury note rose to 4.615 percent, resuming its recent climb after it snapped a three-day winning streak on Wednesday. Investors worried a lack of meaningful progress toward reopening the Strait could keep oil prices elevated, adding to inflationary pressures and weighing on equities.
“The market had briefly stabilized yesterday because investors believed the White House may have been making progress toward a truce with Iran. But that optimism faded, and as a result, oil prices and Treasury yields began moving higher again,” said Art Hogan, chief market strategist at B Riley Wealth.
Investors also focused on a fresh batch of corporate earnings. Walmart tumbled 7.9 percent after the largest global retailer maintained its annual targets and forecast second-quarter profit below estimates.
The S&P 500 consumer staples sector led losses with a 2 percent drop, weighed by Walmart’s fall.
Shares of Nvidia, the world’s most valuable company, edged down 1.5 percent as the AI heavyweight’s upbeat second-quarter revenue forecast and USD80 billion share repurchase program failed to impress investors.
Its stock has jumped about 18 percent so far this year but the pace of growth has slowed as investors believe Nvidia will face tougher competition, not only from Big Tech but also chip rivals including Intel and Advanced Micro Devices.
At 11:54 a.m. ET, the Dow Jones Industrial Average fell 85.05 points, or 0.17 percent, to 49,924.30, the S&P 500 dropped 19.06 points, or 0.26 percent, to 7,413.91, and the Nasdaq Composite lost 88.03 points, or 0.33 percent, to 26,182.33.
In economic data, jobless claims fell last week, pointing to continued labor market resilience, giving the US Federal Reserve room to keep its focus on inflation risks.
US manufacturing activity rose to a four-year high in May as businesses built inventories to guard against potential shortages and rising prices tied to the Iran war.
Among other movers, IBM rose 8.1 percent on the news the Trump administration will fund a handful of quantum computing companies, including a new IBM venture, in exchange for stakes in some of the firms.
GlobalFoundries climbed 10 percent, D-Wave Quantum jumped 24 percent, Rigetti Computing gained 24.4 percent and Infleqtion surged 31.3 percent.