The S&P 500 and the Nasdaq Composite hit intraday record highs before retreating on Thursday as investors weighed the latest developments in the Middle East conflict alongside a wave of earnings reports.
Although no agreement to end hostilities involving Iran has been reached, hopes of diplomatic progress have lifted sentiment this week. Some analysts, however, say more concrete evidence of peace may be needed to sustain the momentum.
“It is difficult to discern why investors are so optimistic,” said Melissa Brown, managing director of investment decision research at SimCorp.
“The market moves over the past few days are more sentiment-based than fundamentally driven. We are still waiting for earnings reports, and the economic data does not really justify the high degree of enthusiasm.”
At 10:06 a.m. ET, the Dow Jones Industrial Average fell 60.68 points, or 0.13%, to 48,403.04, the S&P 500 lost 5.45 points, or 0.08%, to 7,017.50 and the Nasdaq Composite lost 67.64 points, or 0.28%, to 23,948.38.
A senior Israeli official said Israel’s cabinet had met on Wednesday to discuss a possible ceasefire in neighboring Lebanon which could remove a key sticking point to secure a broader peace agreement. President Donald Trump has also indicated Washington could yet reach a deal with Tehran.
However, equities remain vulnerable if diplomacy gives way to renewed escalation.
Wall St jumps on Mideast de-escalation hopes; earnings in focus
Results steer sentiment
Market moves could also become more idiosyncratic as the earnings season gathers pace, offering fresh catalysts for investors.
U.S. beverages giant PepsiCo gained 2% after beating quarterly profit estimates.
Abbott declined 4.5%, to its lowest level since November 2023 after cutting its full-year profit forecast, while Charles Schwab and Travelers fell 5%and 1.3% respectively after their results.
Netflix is also due to report after the markets close.
Most banks that have reported earnings so far this week surpassed estimates, stating that the consumer remains financially healthy, alleviating concerns about the growth engine of the U.S. economy.
However, early momentum appeared to be fading as declines in the consumer discretionary sector and information technology dragged the S&P 500 lower.
Big movers in the session included Myseum, which rose nearly threefold after rebranding as Myseum.AI.
The rally came a day after a similar move by sneaker maker Allbirds and was reminiscent of last year’s wave of companies pivoting to crypto treasury strategies, which sparked a buying frenzy in their shares.
Voyager Technologies rose 3% after NASA signed an order for the company to conduct the seventh private astronaut mission to the International Space Station, the company’s first selection for such a mission.
Investors are also watching the shaky leadership transition at the Federal Reserve. Kevin Warsh, Trump’s nominee to succeed Jerome Powell as Fed chair, appears to face a less smooth and less timely succession than previously expected.
Trump said on Wednesday that he would fire Powell from his seat on the U.S. central bank’s Board of Governors if Powell does not vacate that post as well when his term as Fed chief ends on May 15.
Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE. There were 113 new highs and 27 new lows on the NYSE, and by a 1.21-to-1 ratio on the Nasdaq.
The S&P 500 posted 16 new 52-week highs and one new low, while the Nasdaq Composite recorded 60 new highs and 24 new lows.
American Dollar Exchange Rate