U.S. stocks kicked off the first full week of May on the back foot Monday, as a fresh flare-up in the Middle East sent crude oil prices sharply higher and rattled investor sentiment. The selloff came just days after the major averages wrapped up their strongest monthly performance in years, with the S&P 500 and Nasdaq each posting their best April since 2020.
What Moved Markets
The Dow Jones Industrial Average fell 557.37 points, or 1.13%, to close at 48,941.90. The S&P 500 (SPI:SP500) slipped 29.37 points, or 0.41%, finishing at 7,200.75, while the Nasdaq Composite edged down 0.19% to settle at 25,067.80.
The catalyst was a sudden escalation in the Persian Gulf. The United Arab Emirates said it had intercepted a volley of missiles fired from Iran, marking the first activation of the UAE’s missile alert system since a U.S.-Iran ceasefire was brokered last month. Reports of confrontations between ships near the Strait of Hormuz added to concerns about potential disruptions to global oil supply. West Texas Intermediate crude surged 4.39% to $106.42 per barrel, while Brent crude jumped 5.8% to $114.44.
Energy was the only sector in the green on the day, climbing roughly 0.6% as oil producers benefited from the price spike. The remaining ten S&P 500 sectors all closed in the red, with the Dow bearing the brunt of the selling pressure.
Notable Movers
eBay (EBAY) surged nearly 10% after GameStop (GME) submitted a surprise proposal to acquire the e-commerce platform for $125 per share, valuing the deal at roughly $56 billion. The bold bid from the meme-stock-turned-conglomerate caught the market off guard and sent both stocks into heavy trading volume.
Seagate Technology (STX) rallied sharply after delivering a blowout fiscal third-quarter earnings report that handily topped analyst expectations on both the top and bottom lines, riding strong demand in the data storage space.
Norwegian Cruise Line (NCLH) sank 6.5% after posting mixed quarterly results. While the cruise operator beat earnings estimates, its revenue fell short of expectations, raising questions about the pace of the travel recovery.
Palantir Technologies (PLTR) climbed ahead of its first-quarter earnings report due after the bell. Analysts were expecting earnings per share to more than double year over year, with revenue growth projected near 74%.
Berkshire Hathaway (BRK.B) traded higher after Warren Buffett’s conglomerate beat on both earnings and revenue over the weekend, while its cash pile swelled to nearly $397 billion, fueling speculation about a large acquisition.
Looking Ahead
Investors will be closely watching developments in the Persian Gulf in the coming days, with oil prices likely to remain volatile as long as tensions between Iran and the UAE simmer. On the economic calendar, the week builds toward Friday’s April nonfarm payrolls report, which will give the market a fresh read on labor market strength. More than half of the S&P 500 has now reported quarterly results, with over 80% beating expectations, so earnings season remains a tailwind. But for now, geopolitics has grabbed the steering wheel, and how the Middle East situation unfolds could set the tone for the rest of the week.