Stock Market Today, May 7: Rally Falters as Oil Prices Rise Again

S&P 500 (^GSPC 0.38%) slipped 0.38% to 7,337.11, the Nasdaq Composite (^IXIC 0.13%) eased 0.13% to 25,806.20, and the Dow Jones Industrial Average (^DJI 0.63%) fell 0.63% to 49,596.97 as major benchmarks stalled on doubts about an imminent U.S.-Iran resolution.

Market movers

AI bellwethers stood out again: Qualcomm spiked in double digits intraday on artificial intelligence (AI) enthusiasm before trimming gains. A slew of positive news in recent weeks has lead some to say the stock could be on the verge of a chip breakthrough.

Arm Holdings sank over 10% on smartphone demand concerns.  Palantir Technologies rebounded after a post‑earnings slump. Quantum computing leader IonQ tumbled despite solid Q1 results.

What this means for investors

Markets faltered in the face of rising oil prices as optimism about a quick end to the U.S.-Iran conflict faded, weighing on prices. The S&P 500 and Nasdaq are still close to record levels, but traffic through the Strait of Hormuz remains restricted, and the status of negotiations is unclear.

The extremely strong earnings season, which Deutsche Bank analysts have said is one of the best in 20 years, has eased a lot of the pressure. However, until there is a clear plan to end the conflict and oil supplies normalize, investors can expect these types of oil- and headline-driven swings to continue.

There is also some concern about the sustainability of recent highs, as a small group of mega‑cap, AI‑linked names is responsible for a lot of the gains. Tomorrow’s non-farm payroll data will provide more insight into the broader resilience of the economy.