Wall Street Pulls Back from Record Highs as Iran Conflict and Inflation Worries Weigh on Markets

NEW YORK — Major U.S. stock indexes pulled back from their recent record heights on Thursday as investors grappled with intensifying geopolitical tensions in the Middle East and a sobering update on domestic inflation. The retreat ended a robust multi-week rally, with the tech-heavy Nasdaq leading the day’s losses.

At the closing bell, the Dow Jones Industrial Average dropped 179.71 points, or 0.36%, to finish at 49,310.32. The S&P 500 fell 29.50 points, or 0.41%, to 7,108.40, while the Nasdaq Composite sank 219.06 points, or 0.89%, to close at 24,438.50.

The primary catalyst for the midday volatility was a sharp spike in oil prices. Brent crude briefly surged above $107 per barrel following reports of tightened Iranian control over the Strait of Hormuz, a vital artery for global energy supplies. The disruption stoked fresh fears of "emergency buying" and supply chain bottlenecks, reminiscent of the pandemic era.

Simultaneously, new economic data suggested that the U.S. inflation picture has reached its most worrying level in nearly four years. S&P Global surveys released Thursday showed that service-sector selling prices have accelerated to a 45-month high, driven largely by rising fuel costs and "panic" ordering by manufacturers wary of war-related shortages.

Technology stocks bore the brunt of the selling pressure. Software giant ServiceNow plunged roughly 18% after providing slower-than-expected guidance, which ignited a broader sell-off across the software sector. Lululemon also weighed on the consumer sector, dropping 13% after analysts voiced skepticism over its newly appointed leadership transition.

Despite the broader market decline, there were notable pockets of resilience. Texas Instruments surged more than 17% after blowing past quarterly earnings estimates and boosting its forward guidance, suggesting that demand in the semiconductor industry remains robust. Industrial bellwethers United Rentals and Union Pacific also saw significant gains following solid earnings reports, providing a rare "green shoot" for an otherwise cautious trading session.

As the week progresses, investors remain focused on the potential for a federal response to the energy crisis and the upcoming initial estimate for first-quarter GDP growth, which is expected to show a tepid expansion of just over 1%.

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