Wall Street ended lower on Monday, with the S&P 500 retreating from record highs, after a South Korean ship was hit by an explosion in the Strait of Hormuz and Tehran demonstrated its grip on Middle East oil, dampening optimism about strong first-quarter earnings reports.
Energy stocks rose after reports of the latest confrontations. An explosion reported aboard a South Korean merchant ship appeared likely to persuade commercial shippers the strait was still unsafe after the U.S. President said the U.S. Navy would open it. Tehran said it forced a U.S. warship to turn back after it attempted to enter the strait, while the United Arab Emirates reported a fire at an oil installation following an Iranian drone attack. The renewed nervousness about the Middle East conflict comes after the S&P 500 and Nasdaq hit record highs last Friday amid a stronger-than-expected quarterly earnings season.
S&P 500 companies are expected to post aggregate earnings growth of 28% year/year for the first quarter, double the expectation of 14% at the start of April, according to LSEG I/B/E/S. Wall Street’s AI heavyweights account for much of that optimism.
Berkshire Hathaway BRKa.N BRKa.N reported on Saturday that it was a net seller of stocks for the 14th consecutive quarter. Investors closely watch the conglomerate, often viewed as a bellwether of the U.S. economy, for its insight into valuations and broader market conditions. Shares of GameStop GME.N GME.N tumbled 10% and eBay EBAY.O EBAY.O rose about 5% after the video game retailer unveiled a proposal to buy the online marketplace for about $56 billion in a cash-and-stock deal. GameStop’s stock market value is about $11 billion.
The S&P 500 declined 0.41% to end the session at 7,200.75 points. The Nasdaq declined 0.19% to 25,067.80 points, while the Dow Jones Industrial Average declined 1.13% to 48,941.90 points. Ten of the 11 S&P 500 sector indexes declined, led lower by materials .SPLRCM .SPLRCM , down 1.57%, followed by a 1.17% loss in industrials .SPLRCI .SPLRCI . The energy index .SPNY .SPNY added 0.85%.
Delivery firm FedEx FDX.N FDX.N dropped 9.1% and United Parcel Service UPS.N UPS.N fell 10.5% after Amazon.com AMZN.O AMZN.O said it was rolling out “Amazon Supply Chain Services,” opening up its logistics network for other businesses to use. The declines in FedEx and UPS dragged the Dow Jones Transportation Average index .DJT .DJT down 4.8% to its lowest level in nearly a month.
Palantir PLTR.O PLTR.O climbed 1.4% ahead of the data analytics and defense software company’s quarterly report after the bell. Cruise operator Norwegian NCLH.N NCLH.N dropped 8.6% after slashing its annual forecast due to higher fuel costs related to the Middle East conflict.
Declining stocks outnumbered rising ones within the S&P 500 .AD.SPX .AD.SPX by a 2.2-to-one ratio. The S&P 500 posted 26 new highs and 22 new lows; the Nasdaq recorded 126 new highs and 87 new lows. Volume on U.S. exchanges was relatively light, with 16.3 billion shares traded, compared with an average of 17.7 billion shares over the previous 20 sessions.
Reporting by Noel Randewich in San Francisco; Additional reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai and Matthew Lewis.
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