U.S. equities edged lower on Thursday, retreating from record territory as a sharp selloff in software stocks combined with rising oil prices to weigh on sentiment. Ongoing uncertainty surrounding the Iran conflict also kept investors cautious.

The S&P 500 slipped 0.41% to close at 7,108.40, after briefly touching a fresh intraday high earlier in the session. The Nasdaq Composite led the declines, falling 0.89% to 24,438.50, while the Dow Jones Industrial Average dropped 179.71 points, or 0.36%, to end at 49,310.32.

Technology stocks were at the center of the pullback. IBM and ServiceNow both saw steep declines following their latest earnings releases. Although IBM delivered results ahead of expectations, its unchanged full-year outlook disappointed investors. ServiceNow, meanwhile, flagged slower subscription growth, partly linked to disruptions tied to tensions in the Middle East.

The weakness spread across the broader software sector. Microsoft fell around 4%, while Palantir Technologies dropped more than 7% and Oracle lost roughly 6%. The iShares Expanded Tech-Software Sector ETF (IGV) also declined sharply, reflecting broad-based pressure across the group.

Market participants appear to be reassessing the strong rebound seen since March. According to market commentary, equities may remain range-bound in the near term as investors wait for clearer catalysts to drive the next move.

Geopolitical tensions remain a key overhang. The situation between the U.S. and Iran has evolved into a tense maritime standoff despite a fragile ceasefire. Both sides have reportedly taken actions around the Strait of Hormuz, raising concerns about global energy supply routes.

Adding to the uncertainty, President Donald Trump issued a strong warning regarding potential threats in the region, underscoring the heightened risk environment.

Oil prices responded to the escalating situation, with Brent crude climbing above $105 per barrel. Reports suggesting internal shifts within Iran’s leadership structure further fueled concerns about stability, though details remain unconfirmed.

Meanwhile, reports of air defense activity in Tehran highlighted the ongoing volatility, reinforcing the cautious tone across financial markets.

Overall, while markets have become somewhat less reactive to geopolitical headlines compared to earlier phases of the conflict, the situation continues to influence investor positioning, particularly through its impact on energy prices and global risk sentiment.

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