Stocks Steady Amid U.S.-Iran Tensions, Investors Eye Diplomatic Resolutions

U.S. stocks closed mixed on Thursday, reversing earlier losses due to positive diplomatic signals from the Middle East that calmed markets shaken by U.S. President Donald Trump's threats of strong action against Iran. Investor confidence improved as Iran and Oman worked on protocols for the Strait of Hormuz, and global efforts sought to resolve the crisis.

Initially, stocks fell with rising oil prices after Trump threatened aggressive action, but improved sentiment cushioned the blow. Energy prices soared, with U.S. crude up 11% and Brent up 7%, before traders priced-in temporary disruption. As a result, the S&P 500 gained slightly, while the Dow Jones fell, highlighting divided market sentiment.

The session's rebound reflected cautious behavior, with investors leaning towards resilient stock segments during economic stress. Notably, utilities gained while consumer discretionary stocks underperformed. Sector jitters arose over private credit with Blue Owl's fund withdrawals limited, and attention turned to Elon Musk's SpaceX IPO filing and employment figures.