US stocks fell on Thursday as hopes for a quick end to the Iran war dimmed, while investors grappled with a mixed bag of earnings reports amid renewed concerns about AI-driven disruption in the software sector.

Equity remained roughly unchanged after Iran tightened control over the Strait of Hormuz. Tehran released footage of its commandos attacking a giant cargo ship, while demanding the US lift its naval blockade of Iranian ports.

Stocks fell after reports that Mohammad Bagher Ghalibaf, the speaker of Iran’s parliament, had resigned from the negotiating team. Losses were extended as oil prices rose after reports of airstrikes in Iran.

Iran’s Fars news agency said air defenses have been activated by small drones in several locations across the country.

“We’re playing musical chairs between earnings season and this battle of headlines that isn’t likely to be that great,” said Jay Hatfield, CEO and CIO of Infrastructure Capital Advisors in New York.

“We had a big run, and there are people who want to take away some of the exposure, and using the war as an excuse is not a bad excuse.”

Markets have rallied in recent weeks on hopes that a resolution to the Iran war is on the horizon, along with expectations of solid corporate earnings.

But it is difficult to gain this week. On Monday, the Nasdaq snapped a 13-session winning streak as optimism for a resolution to the war faded.

Fears of rising inflation have also taken center stage as oil prices hover near $100 a barrel.

According to preliminary data, the S&P 500 fell 29.86 points, or 0.42%, to close at 7,108.04, while the Nasdaq Composite lost 218.14 points, or 0.88%, to 24,439.42. The Dow Jones Industrial Average was down 182.45 points, or 0.36%, at 49,313.27.

Data on Thursday showed that weekly initial jobless claims rose only marginally last week, but risks of higher prices due to war continue to hamper the economy.

S&P Global’s flash US composite PMI output index, which tracks the manufacturing and services sectors, rose this month after nearly stalling in March, but the improvement was mostly due to “stock building on concerns about supply availability and inflation.”

Packed earnings calendar in focus

According to Tajinder Dhillon, head of earnings research at LSEG, the earnings season has been largely strong so far, with 82.1% of the 123 companies reporting earnings as of Thursday morning. Earnings growth rate of 15.6% was 14.4% at the beginning of the month.

The S&P 500 tech index was the worst performer among the 11 major S&P sectors, weighed down by declines in IBM after revenue growth slowed in the first quarter due to weakness in its software business.

The sector was also weighed down by a slowdown in revenue growth after reporting quarterly results and delays in closing government deals in the Middle East.

The results rekindled concerns that new AI tools could upend the software sector’s traditional business models, and the S&P 500 software and services index fell nearly 5% in the session.

Tesla shares fell after the company raised its spending plan for the year by more than $25 billion.

Shares of car-rental company Avis Budget plunged nearly 50% and posted their steepest two-day decline after a meteoric rally reminiscent of the “mem-stock” craze.

On the other side, Texas Instruments rose after forecasting second-quarter revenue and profit that beat Wall Street expectations.