Wall St set to open lower in absence of clarity on Iran de-escalation; earnings mixed

By Niket Nishant and Avinash P

April 23 (Reuters) – Wall Street’s main indexes were set to open lower on Thursday, with investors hesitant to extend the recent equities rally in the absence of clear signals on the U.S.-Iran war, while a batch of mixed earnings further dented sentiment.

Iran seized two ships in the Strait of Hormuz and demanded that the U.S. lift its naval blockade on Iranian ports, which remains in effect even after President Donald Trump extended the ceasefire indefinitely.

Investors keen to look past war-related risks have shown strong resilience in recent days, but some fatigue has set in, leading to brief episodes of risk aversion, as they await more clarity on how and when the conflict may ultimately be resolved.

With oil prices over $100 a barrel, the risk of an inflation flare-up also remains.

At 8:40 a.m. ET, Dow E-minis were down 209 points, or 0.42%, S&P 500 E-minis were down 14 points, or 0.20%, and Nasdaq 100 E-minis were down 47.25 points, or 0.17%.

Data on Thursday showed that the number of Americans filing claims for unemployment benefits increased only marginally last week, but risks from war-driven higher prices still threaten the economy.

PACKED EARNINGS CALENDAR IN FOCUS

The earnings season has been largely strong so far, but because the results reflect only one month of disruption from the Middle East conflict, investors are questioning how dependable they are as a gauge of what lies ahead.

“The earnings themselves don’t reflect the impact of the energy supply shock,” said Kiran Ganesh, multi-asset strategist at UBS Global Wealth Management.

While “the oil shock is a drag on growth, there is also a lot of structural support. The market remains comfortable that as long as there is a path towards de-escalation, it can look through higher oil prices in the short term.”

Tesla shares fell 3.4% in the premarket session, after the company raised its spending plan to more than $25 billion for the year.

It is in the middle of one of the most expensive bets in its history as CEO Elon Musk channels funds into artificial intelligence, robotics and chips.

“With all the focus on the war, a forgotten theme that weighed on the market at the start of the year is artificial intelligence overinvestment and diminishing future returns,” said Kyle Rodda, senior financial market analyst for Capital.com.

IBM fell 7.9% after revenue growth slowed in the first quarter on weakness in its software business.

Peers Microsoft and Adobe declined 2.2% and 3.1%, respectively, before the bell.

Lockheed Martin dropped 3.7% after reporting a lower first-quarter profit.

Industrial conglomerate Honeywell International slipped 5.3% and medical equipment maker Thermo Fisher also fell 5.7% after reporting first-quarter earnings.

On the flip side, Texas Instruments rose 10.8% after forecasting second-quarter revenue and profit above Wall Street expectations.

(Reporting by Niket Nishant and Avinash P in Bengaluru; Editing by Devika Syamnath and Shinjini Ganguli)