Wall Street’s major indices ended lower on Thursday, pressured by escalating geopolitical tensions in the Middle East and investor caution ahead of a key U.S. labor report. The S&P 500 slipped 0.2%, while the Dow Jones Industrial Average dropped 184 points, or 0.4%, and the Nasdaq Composite fell 0.1%. Traders were largely risk-off, reacting to both ongoing conflict in the Middle East and mixed economic data that could shape the Federal Reserve’s next steps.
President Joe Biden indicated that Israel is not expected to strike back at Iran imminently following attacks on Tel Aviv earlier this week. This news helped curb fears of an immediate conflict escalation but failed to fully reassure markets. The U.S. is in discussions with Israel over potential retaliation, including possible strikes targeting Iran’s oil facilities, raising concerns about energy supply disruptions. Oil prices moved higher on the news, helping energy stocks finish in positive territory, bucking the broader market trend.
In addition to geopolitical concerns, investors were also eyeing economic data that signaled softening in the U.S. labor market. Initial jobless claims rose to 225,000 last week, slightly higher than the forecasted 222,000 and up from the revised 219,000 the week prior. While these numbers indicate a modest increase in unemployment claims, they remain near four-month lows, suggesting that while the labor market may be cooling, it hasn’t yet hit a critical level. This data sets the stage for Friday’s nonfarm payrolls report, which could offer a clearer signal for the Federal Reserve’s stance on interest rates.
On the corporate front, Levi Strauss (NYSE) plunged over 7% after announcing a review of its Dockers brand for a potential sale, coupled with a lowered revenue forecast for the year. Consumer spending challenges continue to weigh on apparel makers, pushing Levi’s to trim its growth expectations.
Tesla (NASDAQ) also continued its recent decline, falling 3% following news of a recall of over 27,000 Cybertruck units due to delayed rear-view camera images that impair driver visibility. The recall added pressure after the automaker’s disappointing delivery numbers earlier in the week.
In contrast, NVIDIA (NASDAQ) jumped more than 3% after CEO Jensen Huang described demand for the company’s upcoming Blackwell AI chips as “insane.” The upbeat outlook provided a rare bright spot for tech investors in an otherwise subdued session.
As investors grappled with rising Middle East tensions and mixed economic signals, risk sentiment appeared fragile, with the focus shifting firmly to Friday’s jobs report. The outcome is expected to play a critical role in determining the Fed’s next policy move, particularly amid a complex backdrop of external threats and a labor market that, while softening, still shows resilience.
