Dow drops 194 as oil jumps on U.S.-Iran tensions; inflation cools

The Dow Jones Industrial Average fell 194 points Thursday as oil rose above $90 a barrel following renewed clashes between the United States and Iran. The personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, increased 0.4% in April, below forecasts of 0.5%, and the 12-month PCE reading was 3.8%.

The S&P 500 slipped 0.14% and the Nasdaq Composite fell 0.24%. All three major U.S. indexes had closed at record highs the previous session, and the S&P 500 remained on track for a ninth straight weekly gain.

Reports said Iran’s Revolutionary Guard targeted a U.S. airbase after American strikes on a site in Iran. The White House denied claims that Tehran had agreed to restore commercial traffic through the Strait of Hormuz within one month as part of a deal, and President Donald Trump rejected reports that the U.S. was close to a compromise.

West Texas Intermediate crude rose above $90 per barrel and Brent crude traded above $96, with oil prices up more than 2% on the session. Treasury yields edged higher as market participants factored in higher energy costs and increased geopolitical risk.

Technology stocks posted gains tied to earnings and artificial intelligence demand. Snowflake jumped about 33% after raising its annual product revenue forecast and announcing a five-year, $6 billion AI infrastructure agreement with Amazon Web Services. Marvell Technology rose after reporting first-quarter results and has more than doubled year to date. Datadog and MongoDB also advanced.

Retail names moved higher after company reports. Dollar Tree climbed after raising its full-year profit forecast. Best Buy projected second-quarter sales above analyst expectations. Companies linked to drone technology rose after a report said the administration was discussing potential funding support for drone firms.

The monthly PCE reading came in below forecasts at 0.4%. Oil prices rose above $90 as tensions escalated in the Middle East. Treasury yields and major U.S. equity indexes moved in response to those data points and geopolitical developments.