Markets Pull Back From Early Peaks
US stocks edged lower on Thursday after the S&P 500 and Nasdaq touched fresh record highs earlier in the session. The early rally was supported by lower oil prices and optimism that a possible agreement between Washington and Tehran could reduce geopolitical tensions and ease pressure on global crude supply.
As the session progressed, however, the main indexes lost momentum. A pullback in major chip stocks weighed on the broader market, showing that investors remain cautious after a powerful rally in technology and artificial intelligence names.
Chipmakers Drag On The Indexes
Semiconductor shares were among the main sources of pressure. US-listed shares of Arm Holdings fell 10.8% as concerns about the company’s ability to secure enough supply for its new AI chip overshadowed a strong earnings forecast.
The Philadelphia SE Semiconductor index dropped more than 2%, even after gaining nearly 60% so far this year. The decline suggests some investors are taking profits in one of the market’s strongest 2026 trades, especially before key employment data and further news on Iran.
Iran Talks Keep Oil And Stocks Sensitive
Investors continued to monitor US-Iran peace talks. Sources and officials said the two countries were moving toward a temporary agreement to halt the war, with Tehran reviewing a proposal that would stop the fighting while leaving the most contentious issues unresolved.
Oil prices fell 3% in volatile trading, recovering from deeper session lows. Lower crude prices supported risk appetite earlier in the day, but energy stocks moved sharply lower. The S&P 500 energy sector led declines among major groups with a 2.3% drop.
Major Indexes Turn Lower By Midday
At 12:17 p.m. ET, the Dow Jones Industrial Average was down 176.08 points, or 0.35%, at 49,734.51. The S&P 500 fell 22.39 points, or 0.30%, to 7,343.95, while the Nasdaq Composite lost 41.02 points, or 0.16%, to 25,797.93.
The moves came after a relentless advance in technology and AI shares pushed US equities to new highs this year. Strong earnings and signs of sustained demand for artificial intelligence have helped offset concerns about fuel costs, geopolitical risk and the possibility of slower growth.
Labor Data Becomes The Next Test
Recent economic data has helped ease fears of a sharper slowdown. New unemployment claims rose less than expected last week, supported by low layoffs that continue to anchor the labor market.
After a strong private payrolls report on Wednesday, investors are now focused on Friday’s nonfarm payrolls release. Economists polled by Reuters expect the economy to add 62,000 jobs in April after a 178,000 increase in March. The report could shape expectations for Federal Reserve policy through the rest of the year.
Fed Expectations And Stock Movers
Traders continued to expect the Federal Reserve to keep interest rates unchanged through year end, given a resilient labor market and elevated energy prices. Cleveland Fed President Beth Hammack said she expects the central bank to hold rates steady well into the future as it navigates considerable uncertainty.
Among individual movers, cybersecurity stocks rallied after Datadog raised its full-year earnings forecast. Datadog jumped 28%, while CrowdStrike and Palo Alto Networks gained 6.9% and 6.3%, respectively. Whirlpool fell 12.5% after missing first quarter sales estimates and suspending its dividend. For investors, the session showed a market still supported by AI and earnings strength, but increasingly sensitive to valuations, labor data and geopolitical headlines.
