(Updates to mid-afternoon trading)
* S&P 500, Nasdaq back down from record closing highs
* Iran shows off its control over Strait of Hormuz
* Iran air defense is engaging in targets over Tehran – reports
* American Airlines, Honeywell provide disappointing guidance due to war uncertainties
* Oil prices extend gains on reports of Iran air defenses are engaging targets over Tehran
NEW YORK, April 23 (Reuters) – Wall Street stocks dipped on Thursday and crude prices rose as Iran flaunted its control over the Strait of Hormuz and investors parsed a host of mixed corporate earnings reports.
All three major U.S. stock indexes were modestly lower, with the S&P 500 and the Nasdaq easing back from the latest in a recent spate of record closing highs.
Gold ticked down and the dollar was nominally higher. Iran displayed its grip over the Strait of Hormuz on Thursday with a video of its commandos storming a cargo ship following the collapse of peace negotiations and U.S. President Donald Trump’s indefinite extension of the ceasefire. Reports of Iran air defences engaging targets over Tehran, and of a struggle between Iran between moderates and hardliners, sent crude prices spiking.
U.S. crude rose 3.11% to settle at $95.85 per barrel, while Brent settled at $105.70 per barrel, up 3.10% on the day.
“The half-life of a headline-induced move is shortened quite a bit over the last probably two or three weeks,” said Scott Ladner, chief investment officer at Horizon in Charlotte, North Carolina.
“(Stocks) are at all-time highs with oil up 40% over six weeks while a war is going on,” Ladner added. “That’s telling you that like headlines aren’t driving everything, but they can certainly move markets over a day, or a couple of days.” On the economic front, new claims for unemployment benefits remained muted, while S&P Global’s advance PMI reading showed business activity is picking up steam this month, although output prices jumped to the highest reading since July 2022, reflecting supply chain complications arising from the Middle East conflict. First-quarter earnings season has shifted into high gear, with 123 of the companies in the S&P 500 having reported. Of those, 82.1% have beaten analyst expectations. Analysts now see year-on-year S&P 500 earnings growth of 15.6%, on aggregate, according to Tajinder Dhillon, head of earnings research at LSEG. Among companies reporting first-quarter results, American Airlines and Honeywell, among others, provided disappointing guidance due to higher costs and other disruptions related to the U.S.-Iran war. “The world is somewhat changed since the period that’s under inspection,” Ladner said. “Guidance is obviously going to play a lot larger role.” The Dow Jones Industrial Average fell 150.69 points, or 0.31%, to 49,337.97, the S&P 500 fell 22.79 points, or 0.32%, to 7,115.08 and the Nasdaq Composite fell 191.64 points, or 0.78%, to 24,466.02.
European shares closed nominally higher, reversing earlier weakness as investors weighed developments in the Middle East and weak economic data against a wave of corporate results. MSCI’s gauge of stocks across the globe fell 3.85 points, or 0.36%, to 1,067.46. The pan-European STOXX 600 index rose 0.05%, while Europe’s broad FTSEurofirst 300 index rose 3.24 points, or 0.13%. Emerging market stocks fell 8.62 points, or 0.54%, to 1,598.45. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 0.49%, to 818.67, while Japan’s Nikkei fell 445.63 points, or 0.75%, to 59,140.23.
The dollar was essentially flat but headed for weekly gains as U.S.-Iran tensions undermined .ceasefire hopes. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.08% to 98.70, with the euro down 0.06% at $1.1696. Against the Japanese yen, the dollar strengthened 0.02% to 159.5. In cryptocurrencies, bitcoin fell 0.55% to $78,025.23. Ethereum declined 3.28% to $2,313.67. U.S. Treasury yields turned higher in choppy, range-bound trading. The yield on benchmark U.S. 10-year notes rose 1.9 basis points to 4.314%, from 4.294% late on Wednesday. The 30-year bond yield rose 0.8 basis points to 4.9101% from 4.902% late on Wednesday. The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 2.1 basis points to 3.815%, from 3.794% late on Wednesday.
Gold prices reversed earlier gains following news of a possible extension of the Israel-Lebanon truce. Spot gold fell 0.41% to $4,718.29 an ounce. U.S. gold futures were flat to $4,732.40 an ounce.
(Reporting by Stephen Culp; Additional reporting by Marc Jones in London and Stella Qiu in Sydney; Editing by Louise Heavens and Nick Zieminski)
