US shares fell on Thursday afternoon. The DJIA dropped about 0.4% and slipped below 50,000 after nearing 50,100, while the S&P 500 reversed from a fresh intraday record to about -0.3% and the Nasdaq was slightly lower.
Small caps lagged most, with the Russell 2000 down close to 1%. Early gains followed reports that Iran is reviewing a 14-point US proposal and may reply via Pakistani mediators on Thursday, including a 30-day period to negotiate nuclear enrichment, frozen assets, and Strait of Hormuz security.
Oil And Geopolitics Move Markets
The plan would declare an end to the war, but conditions remain disputed, including a US naval blockade and Iranian “new procedures” for Hormuz transit. Oil moved lower then steadied, with WTI briefly below $90 a barrel and Brent near $100, while US petrol was about $4.54 a gallon, the highest since 2022.
Company results were mixed: Fortinet rose about 15%, DoorDash nearly 10%, McDonald’s about 3% on $2.83 a share, Tapestry about 3%, and AppLovin about 4%, while Apple hit an intraday record then eased. Arm fell about 7% and referenced about $1 billion of demand linked to its new AGI CPU, while Whirlpool fell on a miss and dividend suspension, Shake Shack sank close to 19%, Zillow dropped about 5%, and IonQ fell more than 8%.
Initial Jobless Claims were 200K versus 205K expected, and continuing claims were 1.766 million. Productivity rose 0.8% versus 1.1%, unit labour costs were 2.3%, and April job-cut announcements rose about 38% year on year; NFP is forecast at 62K versus 178K, with unemployment at 4.3%.
We are seeing major indexes like the S&P 500 touch new records but fail to hold them, showing traders are hesitant to chase these highs. This pattern of intraday reversals suggests buying protection is a smart move before it gets expensive. Given that the CBOE Volatility Index (VIX) has been hovering in the relatively low 14-16 range for the past month, we believe buying VIX call options for June offers a cheap hedge against a potential pullback.
The market is pricing in a US-Iran deal that has not materialized, creating a significant gap between hope and the physical reality on the ground. We see crude oil futures as underpriced, especially with the ongoing US naval blockade and Iran’s control over the Strait of Hormuz. History shows us that during past tensions in the Strait, like those seen in 2019, oil prices experienced sharp, unpredictable spikes, making the current price near $90 a barrel for WTI look complacent.
Jobs Data Could Drive Volatility
The earnings report from Arm Holdings is a crucial signal that AI demand is now outstripping the physical supply of advanced chips. This bottleneck benefits semiconductor equipment manufacturers, which have seen incredibly strong order books since the AI boom accelerated back in 2024 and 2025. We believe a pairs trade, using options to go long on the makers of chip manufacturing equipment while taking a bearish stance on designers flagging supply issues, is a sound strategy.
With consensus for Friday’s jobs report at a very low 62,000, the market is positioned for a significant reaction to any surprise. A weak number could force the Fed to back off its hawkish stance, while a strong print would validate their tough talk and likely hit equities hard. To capitalize on this binary outcome, we are considering straddles on major indexes ahead of the announcement, betting on a sharp move regardless of the direction.
