Wall Streets main indices fell on Thursday after gains in the previous session, as investors remained cautious amid mixed signals from the United States and Iran regarding prospects for easing tensions in the Middle East.

The Dow Jones Industrial Average declined by about 202 points, or 0.45%, while the SP 500 fell 0.77% and the Nasdaq dropped 1.05%.

A senior Iranian official said the US proposal to end the nearly four-week war is one-sided and unfair, while stressing that the diplomatic path has not ended despite the absence of a realistic plan for peace talks.

Analysts said uncertainty remains the main driver of market volatility, as it is still unclear whether real negotiations are taking place between Washington and Tehran, leading markets to move up and down repeatedly. Despite this, markets remain relatively resilient due to investors fear of missing potential gains if the war comes to an end.

Technology stocks weigh on the market

Technology stocks came under heavy pressure, with the sector falling about 1.2%, while the Philadelphia Semiconductor Index declined around 2.7% after three sessions of gains.

Shares of Meta and Google also fell following a court ruling related to social media addiction cases, weighing on the communication services sector.

Energy rises with oil gains

In contrast, oil prices rose more than 4%, supporting the energy sector to become the best-performing sector within the SP 500.

The Organisation for Economic Co-operation and Development warned that escalating conflict and the closure of the Strait of Hormuz could lead to a sharp rise in inflation and negatively affect global growth.

Federal Reserve under pressure

These developments have placed central banks, led by the US Federal Reserve, in a difficult position regarding interest rates, as markets no longer expect any rate cuts this year after previously anticipating two cuts before the war.

Economic data showed a slight increase in jobless claims, indicating continued strength in the labor market, giving the Federal Reserve room to maintain its current policy stance while monitoring developments in the crisis.

Notable stock moves

Shares of Olaplex surged 51% after Henkel agreed to acquire the company for $1.4 billion.

Gold mining stocks declined as gold prices fell more than 1%.

Overall, declining stocks outnumbered advancing ones on both the New York Stock Exchange and Nasdaq, reflecting the cautious sentiment dominating investors amid ongoing geopolitical uncertainty.