U.S. stocks edge back from their records as oil prices swing higher

Specialist Michael Pistillo works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew)

The U.S. stock market is edging back from its all-time high Thursday following mixed profit reports from Tesla and other big companies. Oil prices, meanwhile, are swinging higher on continued uncertainty about what will happen next in the war with Iran.

The S&P 500 slipped 0.1 per cent following a big rally that erased all its losses because of the war and then carried it to records. The Dow Jones Industrial Average was down 71 points, or 0.1 per cent, as of 10:15 a.m. Eastern, and the Nasdaq composite was 0.5 per cent lower after setting its own record.

Tesla dragged on the market and fell 4.3 per cent even though it reported better results for the latest quarter than analysts expected. Investors may be focusing instead on Tesla’s increased forecast for spending this year, as it builds factories to make robots and other products.

“You should expect to see a very significant increase in capital expenditures,” Elon Musk told investors late Wednesday, “but I think well justified for a substantially increased future revenue stream.”

• S&P 500 market updates here

ServiceNow dropped even more, 16.2 per cent, even though its results for the latest quarter matched analysts’ expectations. The company has been under pressure, along with much of the broad software industry, because of worries that rivals powered by artificial-intelligence technology could undercut its business.

Analysts said investors may have also been underwhelmed by its forecast for a declaration in growth for an important measure of revenue.

Texas Instruments helped limit Wall Street’s losses after breezing past analysts’ expectations for profit in the latest quarter. CEO Haviv Ilan said the semiconductor company is benefiting from growth led by industrial and data center customers, and it gave forecasts for profit and revenue in the spring that cleared analysts’ estimates.

The 16.6 per cent leap for Texas Instrument’s stock was the strongest single force pushing upward on the S&P 500.

In the oil market, prices swung higher as uncertainty continues about what will happen with the Strait of Hormuz. A ceasefire is still in place between the United States and Iran, but oil tankers aren’t able to get through the narrow waterway off Iran’s coast to exit the Persian Gulf and reach customers.

The U.S. military on Thursday seized another tanker associated with the smuggling of Iranian oil, ratcheting up the standoff a day after Iran’s paramilitary Revolutionary Guards took control of two vessels in the strait. U.S. President Donald Trump also said Thursday he ordered the U.S. military to “shoot and kill” small Iranian boats that deploy mines to gum up traffic in the strait.

The price for a barrel of Brent crude, the international standard, rose one per cent to US$102.97 after bouncing between roughly $101 and $106 overnight. It’s unclear whether U.S.-Iran peace talks, previously hosted by Pakistan, would resume anytime soon.

More expensive oil has hurt airlines in particular because of the industry’s already big fuel bills, and stocks diverged in the industry following the latest profit reports.

American Airlines Group rose four per cent after reporting better profit and revenue for the latest quarter than analysts expected. Even though winter storms hurt its revenue during the first three months of the year, American said demand was strong for flights, and it saw the nine best weeks for revenue intake in its 100-year history.

Southwest Airlines, though, lost 2.2 per cent after reporting weaker quarterly results than analysts expected. It said it would not give an updated forecast for profit this year because of “the ongoing macroeconomic uncertainty.”

Also on the losing end of Wall Street was IBM, which sank 9.7 per cent despite reporting better profit and revenue for the latest quarter than expected. Analysts said investors were focusing on some potentially discouraging numbers underneath the surface, including decelerating growth in trends for its software business.

• Dow Jones updates here

In stock markets abroad, indexes fell across much of Europe and Asia. Hong Kong’s Hang Seng fell 0.9 per cent, and Japan’s Nikkei 225 sank 0.7 per cent for two of the bigger losses.

South Korea’s Kospi climbed 0.9 per cent after the government reported better-than-expected economic growth for the start of the year, boosted by strong exports, particularly of computer chips used in the AI boom. Semiconductor supplier SK Hynix said its revenue for the latest quarter jumped more than analysts expected largely because of AI-related demand.

In the bond market, the yield on the 10-year Treasury edged down to 4.29 per cent from 4.30 per cent late Wednesday.

A report in the morning said slightly more U.S. workers applied for unemployment benefits last week, but the number is still at a historically healthy level. A separate, preliminary report on U.S. business output from S&P Global also suggested growth is improving a bit from its near-stagnation seen in March.

Stan Choe, The Associated Press. AP Business Writers Chan Ho-him and Matt Ott contributed to this report.