The Close
The S&P 500 fell 0.38% to close at 7,337.11, dragged lower by losses in Amazon as well as semiconductor stocks such as Broadcom and Micron Technology. The Nasdaq Composite slid 0.13% to end at 25,806.20, while the Dow Jones Industrial Average shed 313.62 points, or 0.63%, settling at 49,596.97. A bit of a hangover from yesterday’s record-setting euphoria, though the pullback was orderly rather than panicked. CNBC
It’s worth noting that all three indexes touched fresh all-time intraday highs again this morning before rolling over — the bulls are still very much in control, but profit-taking and geopolitical uncertainty are keeping a lid on further upside for now.
The Iran War: Where Things Stand
The dominant story remains the U.S.-Iran conflict and the ongoing negotiations over the Strait of Hormuz. Wednesday’s explosive rally — when the S&P closed above 7,300 for the first time and the Dow surged 612 points — was driven by an Axios report that the U.S. and Iran were nearing a deal that would include a moratorium on nuclear enrichment. Iran’s foreign ministry told CNBC it was evaluating a U.S. proposal, but President Trump later tempered expectations, calling a deal “a ‘perhaps, a big perhaps'” and saying Iran still needed to agree. CNBCCNBC
Today, the optimism cooled slightly. Iran continued to assess the memorandum sent by the U.S. to end the war and restore tanker flows through the Strait of Hormuz. U.S.-Iran talks could resume as early as next week, with the fate of the Strait of Hormuz hanging in the balance. TRADING ECONOMICSThe Motley Fool
Oil reflected this wait-and-see mood. WTI crude settled down 0.28% at $94.81 per barrel, while Brent fell 1.19% to close at $100.06 — coming off session lows after trading meaningfully below $100 earlier in the day. Oil has plunged sharply from its highs above $115 earlier this week as peace talk optimism built. CNBC
What Caused the 10 AM Drop
The culprit was the New York Fed’s April Survey of Consumer Expectations, released this morning. The survey showed median one-year-ahead inflation expectations rose another 0.2 percentage point to 3.6% in April, a new high for the current cycle, even as longer-term expectations held steady at 3.1% and 3.0% for the three- and five-year horizons respectively. The NY Fed noted that short-term inflation expectations nudged higher as consumers continued to feel the bite of higher energy prices, while the outlook for gas price increases plunged 4.3 percentage points to 5.1%. New York FedCNBC
While the long-term anchoring of expectations was the silver lining, markets read the continued creep higher in near-term expectations as a rate-cut-killer. With the Fed already on hold, any whiff of sticky inflation gives traders reason to reduce risk. The Dow and small caps bore the brunt of the selling, while tech — more insulated from rate sensitivity at the moment — held relatively firm.
Notable Movers
DoorDash climbed nearly 10% after posting better-than-expected quarterly results. Planet Fitness was the session’s disaster story, cratering 33% — on pace for its worst single-day drop ever — after slashing its 2026 outlook and abandoning a planned price hike. CEO Colleen Keating acknowledged the chain may have pivoted too aggressively toward wealthier customers, spooking the budget-conscious beginners who built the brand. TheStreetThe Motley Fool
Arm Holdings tumbled 10% despite an earnings beat, as investors digested supply constraints and smartphone demand concerns. Warby Parker soared 27% on blockbuster Q1 results. Datadog surged 28% after beating Q1 expectations with EPS of 60 cents versus the 51-cent consensus, and issuing Q2 revenue guidance well above estimates. The Motley Fool + 2
Vital Farms dropped 20% on a surprise first-quarter loss. CNBC
After the bell, Airbnb reported revenue growth of 18% year-over-year to $2.7 billion and boosted its 2026 revenue forecast, citing “particularly strong” bookings. TheStreet
The AI / Semiconductor Narrative
Semiconductors finally took a breather after a weeks-long rally. The Financial Times flagged today that over half of the S&P 500’s recent gains came from just five stocks — Alphabet (+23.79%), Broadcom (+18.97%), Amazon (+22.74%), Nvidia, and a handful of AI-adjacent names — describing it as a rebound driven by the “smallest number of stocks on record.” That concentration risk is worth watching. TheStreetTheStreet
Paul Tudor Jones told CNBC the AI-fueled bull market still has “another year or two” to run, drawing parallels to the late 1990s internet era — but also warning that when it ends, the drawdown could be significant. CNBC
Futures & the Road Ahead
After-hours action is being supported by the Airbnb beat and ongoing Iran deal optimism. Futures are modestly in the green as of this writing. The key catalysts for tomorrow: any formal Iranian response to the U.S. memorandum, further earnings, and how oil prices open in Asia. If a deal materializes over the weekend, expect a gap-up open on Monday — energy stocks would sell off hard while everything else rips. If talks stall, the $95 WTI level will be tested again quickly.
Keep an eye on Nvidia’s earnings slated for May 20 — at this point, it’s the next major event risk for the broader market.
Settle in, watch the Strait of Hormuz, and don’t fight the Fed. Good night.
