NEW YORK, Aug 6 – US stocks moved modestly lower Thursday as investors weighed rising oil prices, uneven corporate earnings and continuing uncertainty surrounding the conflict involving the United States and Iran. The retreat came after Wall Street began the week with a powerful rally that pushed major indexes to record levels, but the momentum has cooled over the past two sessions.
The S&P 500 declined 13.59 points, or 0.2%, to finish at 7,709.96. The index moved farther below the record it reached Tuesday, although it remained on course for a strong gain for the week. The Dow Jones Industrial Average fell 464.02 points, or 0.9%, to 53,885.10, while the Nasdaq composite slipped 15.09 points, or 0.1%, to 26,348.35.
Despite Thursday’s declines, both the Dow and Nasdaq remained positioned for substantial weekly gains heading into Friday. Investors are increasingly focused on whether the recent rally can continue as economic risks build and companies provide a mixed picture of their financial health.
“August is off to an extremely strong start, but there is still plenty of August left to go, and August is typically a volatile month for stocks,” Clark Bellin, president and chief investment officer at Bellwether Wealth, said in a research note.
Earnings Offer Support as Oil and Inflation Create New Risks
Corporate earnings have been one of the more encouraging elements for investors this week. Companies across industries have been reporting quarterly results, giving Wall Street a clearer picture of how businesses are dealing with elevated costs, changing consumer demand and uncertainty surrounding the broader economy.
Warner Bros. Discovery gained 1.7% after its latest earnings exceeded market expectations. Molson Coors also advanced, rising 1.3%, after reporting results that investors viewed favorably.
The session also featured sharp declines in some major companies. Honeywell Aerospace plunged 23.2% after its results fell considerably short of analysts’ forecasts. AppLovin dropped 19.7% following a quarterly report that produced a mixed reaction among investors.
The overall earnings picture, however, remains relatively strong. About 85% of the companies in the S&P 500 have now reported their latest results, and aggregate earnings growth is developing into the strongest performance seen since 2021. Strong profits have helped reduce some concerns that stock valuations had become excessive following the market’s prolonged climb.
Investors also followed developments involving SpaceX. The company’s shares rose 6.1% after more than 911 million shares held by early investors and employees became eligible for sale as a lockup period expired.
The number of shares becoming eligible for trading is more than twice the amount initially offered to the public when SpaceX went through its initial public offering. The company, led by Elon Musk, saw its shares climb as high as $225 following its market debut in June, but the stock has subsequently fallen below its initial offering price of $135. By Thursday, it was trading at around $115.
Oil markets provided a more significant source of concern for investors. Brent crude, the international benchmark, climbed 3.8% to $82.49 a barrel as uncertainty surrounding the US conflict with Iran continued to disrupt expectations for global energy supplies.
The Strait of Hormuz remains at the center of the energy concerns. Iran has said it is nearing an agreement with Oman that could allow the strategically important waterway to reopen. President Donald Trump has also previously indicated that an agreement could be close, although negotiations and developments surrounding the conflict have repeatedly shifted during the past five months.
The importance of the waterway has made the situation particularly sensitive for global markets. At one point during the conflict, crude prices climbed as high as $113 a barrel. Roughly one-fifth of the world’s traded oil and natural gas has historically moved through the Strait of Hormuz, making any prolonged disruption a major concern for energy markets and the global economy.
Higher energy prices are also complicating the US inflation outlook. The annual inflation rate remains above 3%, while more expensive fuel and transportation costs are increasing expenses for businesses and households. If oil prices remain elevated, consumers could face higher gasoline bills while companies may have to pay more to transport goods and operate their businesses.
Those pressures could alter consumer behavior. Households facing higher costs for fuel, food transportation and other necessities may have less money available for discretionary purchases. Businesses tied to travel, entertainment and other nonessential spending could therefore face additional pressure if consumers become more cautious.
The US economy is already showing signs of slower growth. Economic output expanded at an annualized rate of 1.5% in the second quarter, a relatively subdued pace compared with stronger periods of expansion. Consumer spending has remained a source of resilience, and the labor market continues to provide support, but investors are increasingly concerned about whether those strengths can withstand higher prices and tighter financial conditions.
Employment data released Thursday added another piece to the economic picture. The number of Americans filing new applications for unemployment benefits increased last week, although layoffs remain at historically low levels compared with much of the past several decades.
The labor market has nevertheless lost some momentum. Employers added only 57,000 jobs in June, reflecting a noticeable slowdown in hiring. Investors are now awaiting the July employment report, which is scheduled for release Friday and could play an important role in shaping expectations for monetary policy and the direction of financial markets.
The Federal Reserve has kept its benchmark interest rate unchanged as policymakers attempt to balance persistent inflation against signs of slower economic growth. The combination of inflation remaining above the central bank’s preferred level and a gradually cooling labor market has made the outlook particularly difficult.
Stubborn price pressures could encourage Federal Reserve officials to consider higher interest rates later in the year if inflation fails to moderate. Such a move would increase borrowing costs for consumers and businesses and could further slow economic activity. Higher interest rates can also place pressure on stock valuations by making bonds and other interest-bearing investments more attractive.
Bond markets reflected some of those concerns Thursday. The yield on the benchmark 10-year US Treasury note increased to 4.67%, up from 4.63% late Wednesday.
European markets were mostly higher, offering some contrast to the cautious mood on Wall Street.
For US investors, Friday’s employment report will likely provide the next major test for the market. A stronger-than-expected jobs reading could reinforce confidence in the economy but potentially increase concerns about inflation and interest rates. A weaker report could ease pressure on the Federal Reserve but raise fresh questions about economic growth.
The combination of solid corporate earnings, rising oil prices, persistent inflation and an uncertain geopolitical environment leaves investors with competing signals. Wall Street has maintained much of its recent strength, but Thursday’s decline underscored how quickly sentiment can change when energy markets, economic data and monetary policy concerns converge.