US Stocks Ebb, Oil Prices Rise Amid Tensions in Strait of Hormuz, Mixed Corporate Earnings

Wall Street Stocks Dip as Iran Displays Control Over Strait of Hormuz

NEW YORK, April 23 (Reuters) - The S&P 500 and the Nasdaq retreated from record closing highs on Thursday, as investors digested a mix of corporate earnings reports and escalating tensions in the Middle East.

The S&P 500 fell 22.79 points, or 0.32%, to 7,115.08, while the Nasdaq Composite dropped 191.64 points, or 0.78%, to 24,466.02. The Dow Jones Industrial Average declined 150.69 points, or 0.31%, to 49,337.97.

Crude prices, meanwhile, surged as Iran showcased its control over the Strait of Hormuz. U.S. crude rose 3.11% to settle at $95.85 per barrel, while Brent settled at $105.70 per barrel, up 3.10% on the day.

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Middle East Tensions Drive Crude Prices Higher

Reports of Iran air defenses engaging targets over Tehran and a struggle between moderates and hardliners sent crude prices spiking. The Strait of Hormuz, a critical shipping lane, has been a focal point of tensions between Iran and the United States.

New claims for unemployment benefits remained muted, while S&P Global's advance PMI reading showed business activity is picking up steam this month. However, output prices jumped to the highest reading since July 2022, reflecting supply chain complications arising from the Middle East conflict.

Corporate Earnings Disappoint

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Among companies reporting first-quarter results, American Airlines and Honeywell provided disappointing guidance due to higher costs and other disruptions related to the U.S.-Iran war. Analysts now see year-on-year S&P 500 earnings growth of 15.6%, on aggregate, according to Tajinder Dhillon, head of earnings research at LSEG.

European shares closed nominally higher, reversing earlier weakness as investors weighed developments in the Middle East and weak economic data against a wave of corporate results.

The dollar was essentially flat but headed for weekly gains as U.S.-Iran tensions undermined ceasefire hopes. The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.08% to 98.70.

U.S. Treasury yields turned higher in choppy, range-bound trading. The yield on benchmark U.S. 10-year notes rose 1.9 basis points to 4.314%, from 4.294% late on Wednesday. The 30-year bond yield rose 0.8 basis points to 4.9101% from 4.902% late on Wednesday.

Gold prices reversed earlier gains following news of a possible extension of the Israel-Lebanon truce. Spot gold fell 0.41% to $4,718.29 an ounce.