Wall Street falls, geopolitics takes precedence over results

The New York Stock Exchange ended in the red on Thursday, weighed down by investors’ nervousness over increasing uncertainties in the Middle East, while keeping an eye on corporate earnings.

Following a double record for the Nasdaq and the broader S&P 500 index, they fell by 0.89% and 0.41% respectively. The Dow Jones slipped by 0.36%.

According to Art Hogan from B. Riley Wealth Management, there is currently a “tug of war between the fundamentals – with better-than-expected results so far – and the fact that news from the Strait of Hormuz has not improved.”

“The focus on earnings seems to have been overshadowed by the rise in energy prices today,” he told AFP.

Oil prices continued to rise – with Brent crossing the $100 per barrel mark – due to “disappointment over the failure to re-open the Strait of Hormuz, in conjunction with the tense expectation of upcoming negotiations” between Washington and Tehran, stated Carsten Fritsch from Commerzbank.

US President Donald Trump assured on Thursday that he has “all the time in the world” in the Middle East conflict, where the ceasefire in effect for two weeks between Tehran and Washington appears fragile.

Iranian media reported explosions in Tehran, and the Israeli Defense Minister expressed readiness to resume war, although a country security source told AFP that the army was not attacking Iran.

“Bond yields and oil prices remain uncomfortably high,” Adam Turnquist from LPL Financial emphasized.

The yield on the 10-year US Treasury bonds, the benchmark date, rose to 4.32% from 4.30% at the previous closing.

Despite the stock market indices decline, according to analysts at Briefing.com, it is important to put this into perspective.

“The Nasdaq was up 14.2% for the month before today’s session; so it is not far-fetched to say that it was vulnerable to some profit-taking,” they noted.

Another key point of interest for investors is the quarterly performance of companies.

Electronic components specialist Texas Instruments surged by over 20% to $282.23, driven by better-than-expected results in the first three months of the year. The company expects its net profit per share for this quarter to be between $1.77 and $2.05, compared to the $1.57 estimated by analysts.

ServiceNow software publisher (-17.59% at $84.94) struggled despite a 22% increase in its first quarter revenue. Its net profit slightly increased on the period, but the company cited “headwinds” from the Middle East, where the conflict delayed the conclusion of some contracts.

Following suit, Adobe dropped by 6.63% and Oracle by 5.98%.

Despite better-than-expected results, electric vehicle specialist Tesla was penalized for its ever-increasing spending prospects, estimated at $25 billion this year. Its stock fell by 3.56% to $373.72.

As for economic indicators, weekly jobless claims were slightly above expectations, but “it must be recognized that the claims remain very low compared to past standards,” according to Samuel Thombs from Pantheon Macroeconomics.

– Nasdaq