S&P 500 and Nasdaq slip from records as US-Iran Hormuz exchange resumes

Wall Street’s record run hit a wall on Thursday. The S&P 500 and Nasdaq Composite both printed fresh intraday all-time highs at the open, then gave it all back and closed in the red after a fresh shooting match near the Strait of Hormuz lifted crude and pulled the rug from under the rally.

By 1:45 pm in New York the S&P 500 was down 0.38 per cent. The Nasdaq-100 was off 0.10 per cent. The Dow Jones Industrial Average had dropped 0.63 per cent, according to The Motley Fool’s session wrap.

The trigger was the Gulf. Iranian forces fired on three US Navy destroyers transiting the Strait of Hormuz. US Central Command answered with strikes on military targets inside Iran, according to a Yahoo Finance live blog. President Donald Trump said the destroyers had “successfully exited the waterway” and were unharmed. He warned in a social-media post that the United States would “knock them out a lot harder, and a lot more violently, in the future, if they don’t get their Deal signed, FAST!”

What moved the tape

Brent jumped as much as 2.9 per cent and got close to $103 before giving some of it back into the close. WTI traded around $96 overnight, up roughly 2 per cent in futures. The strait has been effectively shut to commercial tanker traffic since late February, when the war started, and that choke point has been baked into the oil curve ever since.

Cyclicals took it on the chin. Caterpillar fell 3.4 per cent. Goldman lost 1.5. Amazon shed 1.4. A firmer dollar and a small back-up in Treasury yields did the cap-weighted growth complex no favours either.

Mega-cap tech was the offset. Tesla rose 3.1 per cent. Nvidia added 1.8. Microsoft gained 1.7. Strip those three out and the Nasdaq-100 would have closed a lot uglier.

How traders read it

The reversal wasn’t about the strikes. It was about oil. Crude spent the morning lower. The bounce off those lows reset the tape. The Motley Fool wrap put it bluntly: “oil prices rebounded after trading lower in the morning session.” Energy turns higher, the inflation worry comes straight back.

That worry runs through the Fed. April payrolls land Friday morning. Consensus is 65,000 jobs and 4.3 per cent unemployment, per the Yahoo Finance preview. Soft print, the cut is back on. Hot print plus an oil shock, the cut argument gets harder to make.

The cross-asset reaction was calm. No rush into long-dated Treasuries. Gold didn’t break out of its weekly range. Rates and metals told the same story. The Hormuz exchange is being priced as one more beat in a pattern that’s been running since February. Not a step-change.

Asia-hours futures

The slide bled into Friday in Asia. S&P 500 and Nasdaq-100 futures each traded down 0.2 per cent. Dow futures were off about 0.1. Direction now waits on payrolls, then earnings from Toyota, Sony, and Brookfield Asset Management.

What’s next

Hormuz complicates the story Wall Street had been telling all week, which was that a US-Iran deal might be close. Iran hasn’t replied to the latest American proposal. So long as shipping through the strait stays restricted, the bid in oil stays. The equity playbook from here is the same one we’ve been running. Oil leads. Breadth narrows. Mega-cap tech carries the indices on days the cyclicals get hit.

Under the hood the dispersion was loud. Software and AI infrastructure stocks closed green. Industrials, banks, and global-supply-chain names took the selling. Same split as every oil-driven session this quarter.

Thursday’s pre-fade high was the third record close in five sessions. Whether this is the start of something bigger or just another shake-out comes down to two things. Can crude hold Thursday afternoon’s levels. And what does the jobs print say on Friday.