Wall Street Posts Modest Decline Amid Ongoing Middle East Market Volatility Assessment

U.S. Stocks Pare Losses Amid Diplomatic Moves in Middle East

U.S. stocks rebounded in the afternoon on Thursday as oil prices pulled back from session highs after diplomatic moves raised hopes of easing tensions in the Middle East. Despite inflation concerns weighing on markets ahead of a long holiday weekend, investor sentiment steadied after Iran's foreign ministry said it was drafting a protocol with Oman to manage traffic through the Strait of Hormuz and Britain announced that about 40 countries discussed how to end the crisis.

The rebound reflected caution, with investors favoring areas seen as more resilient to economic stress. Utilities rose about 0.5%, while consumer staples gained nearly 0.4%. In contrast, consumer discretionary stocks slid more than 1.4%, the worst-performing sector on the day.

The Dow Jones Industrial Average fell 0.38% to 46,388.83 points, while the S&P 500 lost 0.19% to 6,562.91 points and the Nasdaq Composite lost 0.23% to 21,790.98 at 2:09 p.m.

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The three indexes are on track for their biggest weekly rise in four months and the first week of gains in six, as signs earlier this week that the conflict could end soon lifted sentiment. Wall Street's fear gauge, the CBOE VIX index, rose to 25.24 points after falling to an over one-week low on Wednesday.

In other market news, private credit jitters resurfaced after Blue Owl capped the amount investors can withdraw from two of its retail-focused funds, sending its shares down 1.7%. On the S&P 500, consumer discretionary shares weighed the most, led by a 5.7% drop in Tesla after its first-quarter delivery figures.

Further developments on Elon Musk's SpaceX will be in focus after it confidentially filed for a U.S. initial public offering on Wednesday, and is expected to target a $1.75 trillion valuation. Friday's nonfarm-payroll numbers will be in the spotlight after weekly jobless claims fell last week, but U.S. markets will remain closed throughout the long weekend.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Globalstar's shares jumped 7.8% after a report said Amazon is in talks to buy the low-earth-orbit communication satellites company. Markets will be closed on Friday for the Good Friday holiday.