Explosion in Strait of Hormuz Triggers Wall Street Correction, S&P 500 Retreats from Record High
NEW YORK, KOMPAS.com - The United States stock market, or Wall Street, closed weaker on Monday’s trading (4/5/2026), with the S&P 500 retreating from its record high after the incident of an explosion targeting a South Korean ship in the Strait of Hormuz and rising geopolitical tensions in the Middle East.
Citing Reuters on Tuesday (5/5/2026), the S&P 500 closed down 0.41 percent at 7,200.75. The Nasdaq Composite weakened 0.19 percent to 25,067.80, while the Dow Jones Industrial Average plunged 1.13 percent to 48,941.90.
Ten out of eleven sectors in the S&P 500 experienced declines, led by the materials sector which fell 1.57 percent, followed by the industrials sector which weakened 1.17 percent. The energy sector, however, strengthened 0.85 percent in this session.
Tehran stated that it had forced a US warship to turn back after attempting to enter the strait, while the United Arab Emirates reported a fire at an oil facility following an Iranian drone attack.
This new unease related to the Middle East conflict emerged after the S&P 500 and Nasdaq Composite hit record highs last Friday, amid a season of quarterly earnings reports that were stronger than expected.
“With the market at all-time highs, there’s not much room for error, and it seems that the large asymmetric risks are still tilted towards downside, even if it’s not the most likely scenario that we return to open war conflict,” said Ross Mayfield, investment strategist at Baird Private Wealth Management.
Major artificial intelligence (AI) companies on Wall Street contributed to much of that optimism.
On the other hand, Berkshire Hathaway reported on Saturday that it had been a net seller of stocks for the 14th consecutive quarter. Investors are watching this conglomerate, often seen as an indicator of the US economy, to gain a broader picture of market valuations and conditions.
Meanwhile, GameStop shares plunged 10 percent, while eBay rose around 5 percent after the video game retailer announced a proposal to acquire the online marketplace for approximately $56 billion in a cash and stock deal. GameStop’s own market capitalisation is around $11 billion.
Declines in FedEx and UPS shares dragged the Dow Jones Transportation Average down 4.8 percent to its lowest level in nearly a month.
On the other hand, Palantir Technologies shares rose 1.4 percent ahead of the data analytics and defence software company’s quarterly report after market close.
Shares in Norwegian Cruise Line, the cruise ship operator, fell 8.6 percent after cutting its annual projections due to rising fuel costs triggered by the Middle East conflict.