The S&P 500 fell 0.40% to 7,335.96 points on Thursday as chip stocks pulled back after a recent rally and uncertainty over US-Iran peace talks weighed on markets.
The Nasdaq declined 0.15% to 25,799.74 points, while the Dow Jones Industrial Average dropped 0.55% to 49,638.38 points.
US-listed shares of Arm Holdings fell 10% as supply concerns around its new AI chip overshadowed a strong earnings forecast.
Intel declined 1.9%, and Advanced Micro Devices fell 3.1%, reversing part of their gains from earlier in the week. The PHLX chip index lost 2.4%, trimming its quarterly gain to 45%.
Sources and officials said the United States and Iran were moving toward a temporary agreement to halt their war, with Tehran reviewing a proposal that would leave key disputes unresolved.
Oil prices fell 1% in volatile trading after rebounding from session lows. The S&P 500 energy index led sector losses, down 2.3%.
NVIDIA and Microsoft each rose more than 2%, showing continued investor demand for heavyweight artificial intelligence stocks.
Data showed US jobless claims rose less than expected last week, following a strong private payrolls report on Wednesday.
Investors are awaiting Friday’s nonfarm payrolls report, with economists in a Reuters poll expecting 62,000 jobs added in April after a 178,000 gain in March.
Cleveland Federal Reserve President Beth Hammack said she expected interest rates to remain steady amid uncertainty.
Cybersecurity stocks rallied after Datadog raised its full-year earnings forecast, with Datadog rising 29%, CrowdStrike gaining 7%, and Palo Alto Networks adding 5.5%.
Whirlpool fell 13% after the appliance maker missed first-quarter sales estimates and suspended its dividend.
