US stocks retreated from record highs on Thursday as investors closely monitored geopolitical tensions involving Iran and awaited its response to a US proposal aimed at de-escalating conflict and reopening key energy and trade routes such as the Strait of Hormuz. The pullback came after two consecutive sessions of all-time closing highs in major US indices.

The S&P 500 Index fell 0.4%, with nine of its 11 sectors ending in negative territory. Materials and energy stocks led the declines, reflecting broader market caution. The tech-heavy Nasdaq 100 also slipped, down 0.1%, even as semiconductor and artificial intelligence-linked equities continued to attract strong long-term interest from investors.

Oil prices remained elevated amid uncertainty, with West Texas Intermediate crude trading near $95 per barrel, up around 0.2%. Market sentiment was influenced by reports from Iran’s Fars news agency, which said explosions were heard near Bandar Abbas, a strategically important port near the Strait of Hormuz—one of the world’s most critical oil shipping chokepoints.

Also Read: Eminence Capital to Shut After 27 Years as Ricky Sandler Exits Hedge Fund

The geopolitical backdrop added volatility to an otherwise strong earnings-driven market environment. Companies such as Advanced Micro Devices had recently supported gains in the tech sector, while mega-cap firms like Alphabet continued to underpin broader index strength. Despite short-term fluctuations, investor appetite for equities remained supported by solid corporate earnings trends.

Market strategists noted that expectations of potential de-escalation between the US and Iran were helping stabilize sentiment, even as oil prices remained well above pre-conflict levels. Analysts highlighted that elevated energy costs could still weigh on corporate margins and consumer spending if tensions persist, keeping inflation concerns in focus.

Corporate earnings continued to drive individual stock moves. Whirlpool shares fell sharply after a weaker earnings outlook, while firms such as Warby Parker and Datadog posted strong gains following better-than-expected results. Investors also looked ahead to labor market data and upcoming Federal Reserve policy signals, which could shape expectations around interest rate cuts.

Broader economic indicators showed mixed signals, with rising tech-sector layoffs contrasting with relatively stable jobless claims. Market participants are now awaiting key payroll data and additional earnings reports, while continuing to assess how geopolitical risks and energy price movements may influence equity performance in the near term.

Also Read: Brent Crude Falls Below $100 Amid US-Iran Deal Optimism and Market Volatility