The Dow Jones Industrial Average slipped below the psychologically important 50,000 mark on Thursday, retreating from an early-session high as weakness in chip stocks and caution ahead of Friday's jobs report weighed on sentiment. The blue-chip index closed the early afternoon at 49,607.16, down 303.43 points, or 0.61%, after opening above 50,000 and touching a session peak of 50,130.20.
The broader market showed a mixed picture. The S&P 500 and the Nasdaq Composite both notched new intraday records earlier in the session but later gave back gains as technology shares, particularly semiconductor names, lost momentum. The retreat in the Dow underscored a rotation away from some of the rally's key drivers, with investors taking profits in high-priced components.
Oil prices fell sharply, providing an initial lift to stocks but failing to sustain the broader advance. Brent crude dropped 3.17% to $98.06 a barrel, while West Texas Intermediate declined 3.31% to $91.93. The decline came amid reports of potential progress in U.S.-Iran talks that could eventually ease tensions in the Strait of Hormuz and increase global oil supply.
However, analysts cautioned that a deal remains uncertain. RBC's Helima Croft noted it is "far from clear" that any real progress has been made, while SEB Research's Ole Hvalbye warned that if talks collapse, Brent could surge back above $120 a barrel. Even with a deal, physical crude shipments may take time to catch up, leaving risk premiums in paper markets elevated.
The Dow's price-weighted structure amplified the impact of declines in its most expensive components. Caterpillar and Merck combined to erase roughly 194 points from the index, according to MarketWatch. JPMorgan Chase, Chevron, and Sherwin-Williams also contributed to the slide.
Chip stocks were a notable drag. Arm Holdings fell on supply concerns for its upcoming AI chip, while Intel and Advanced Micro Devices also edged lower. In contrast, Datadog bucked the trend by raising its full-year outlook, lifting cybersecurity names CrowdStrike and Palo Alto Networks.
Investors are now squarely focused on Friday's nonfarm payrolls report for April, which is expected to provide clarity on the health of the U.S. labor market. Weekly jobless claims rose by 10,000 to 200,000, slightly below the 205,000 forecast. FWDBONDS chief economist Christopher Rupkey described the data as "steady as a rock," suggesting the Fed is unlikely to cut rates soon.
Federal Reserve policy remains a key overhang. Cleveland Fed President Beth Hammack indicated that rates are likely to remain on hold "for quite some time" as policymakers weigh inflation pressures and economic uncertainty. The central bank kept its key rate at 3.5% to 3.75% after its most recent meeting.
Earnings continue to provide a solid foundation for the market. S&P 500 companies are on track for first-quarter earnings growth of 28.2%, the strongest since Q4 2021, according to LSEG data. "Earnings have been the engine," said Chris Fasciano, chief market strategist at Commonwealth Financial Network, adding that the rally gained traction once worst-case scenarios around the Iran conflict receded.
Global markets showed resilience. MSCI's Asia-Pacific index excluding Japan hit a record high, and Japan's Nikkei 225 surged past 62,000 for the first time. European markets pulled back slightly after a strong previous session. The question now is whether Thursday's pullback is merely a pause in an earnings-driven rally or the beginning of a deeper correction.
