Wall Street Brief (April 24): US stocks retreated from highs on Thursday, with significant pressure on technology and growth sectors, while defensive sectors strengthened against the trend; geopolitical risks escalated again, oil prices surged, and sentiment turned cautious once more

Summary: US stocks fell back from highs on Thursday, with the S&P 500 down 0.41%, Nasdaq down 0.89%, Dow Jones down 0.36%, and Russell 2000 down 0.37%. All four major indices closed lower, with Nasdaq experiencing the deepest decline, showing more pronounced pressure on technology and growth sectors. The VIX rose to 19.31, up 2.06% from the previous day, reflecting a renewed shift toward caution in market sentiment. The main trading theme of the day was the renewed escalation of tensions in the Strait of Hormuz, with high oil prices overshadowing the optimism from earnings reports the day before. In terms of sector performance, utilities, industrials, and consumer staples outperformed, while technology, consumer discretionary, and financials were weaker. Chinese stocks faced broad pressure. In asset classes, the US Dollar Index rose by 0.22%, gold fell by 0.98%, crude oil surged by 4.45%, and Bitcoin dropped by 0.47%.

I. Major Events

1. Geopolitical risks escalated again, causing oil prices to surge significantly

On Thursday, Trump ordered that the US military could 'shoot and kill' Iranian boats laying mines in the Strait of Hormuz and indicated that mine-clearing operations would continue to escalate. On the same day, the US military also seized an oil tanker linked to Iranian oil smuggling. Although Trump simultaneously announced a three-week extension of the ceasefire between Lebanon and Israel, he neither lifted the blockade nor restored stable passage through the Strait of Hormuz. For the market, the new information is no longer about whether the ceasefire remains in place, but rather about the ongoing risks in the strait and energy supply disruptions still fermenting. Correspondingly, oil prices rose again, and risk assets had to reprice in higher geopolitical premiums.

2. US April PMI rebounds: Growth hasn't collapsed, but costs are rising first

The US April Flash PMI Composite Output Index rose to 52.0, indicating that economic activity improved from near stagnation in March. However, S&P Global also emphasized that this recovery came alongside supply concerns, preemptive stockpiling, and accelerating price increases.

2. Tesla raised its capital expenditure forecast for 2026, causing a significant drop in its stock price

Tesla has increased its capital expenditure plan for 2026 to over $25 billion and expects to shift back into negative free cash flow for the remainder of the year after unexpectedly recording positive free cash flow in Q1. Management’s direction is clear: continue heavy investments in autonomous driving, robotics, and AI infrastructure. However, what the market focused on Thursday was a different question: how long will it take for these investments to reflect on revenue and profit, and will this extend the cash flow recovery cycle? As a result, Tesla's share price dropped by 3.56%, pressuring the Nasdaq and high-beta growth sectors.

This means that what the market faced on Thursday was not simply 'weakening growth,' but rather a combination of 'resilient growth with inflation and cost pressures resurfacing.' For long-duration growth valuations, such an environment is often harder to price, which explains why the overall index only saw a minor decline while tech-heavy sectors pulled back more sharply.

II. Major Trends

The most notable aspect on Thursday was not that the tech-focused trend was completely disrupted, but that the short-term upward trajectory clearly slowed. QQQ gained 6.76% over two weeks and 5.07% over three months, still significantly outpacing DIA’s two-week gain of 2.35% and three-month gain of 0.24%, indicating that tech and growth remain the mid-term focus. However, compared to the previous trading day, QQQ’s two-week gains fell from 8.09% to 6.76%, and MAGS declined from 11.07% to 7.59%, showing a more substantial cooling of high-growth stocks on Thursday.

The second trend is that the divergence between weighted and equal-weighted indexes remains unbridged. SPY gained 4.20% over two weeks, while RSP only rose 2.21%, suggesting that the earlier push to new highs was driven mainly by large-cap stocks, rather than broad-based recovery. On Thursday, as tech stocks retreated, this structural fragility became more evident: while the index decline was not extreme, the breadth and internal support were far from solid.

The third trend is a renewed shift of funds towards more defensive sectors with higher cash flow certainty. SPYV rose 2.06% over three months, slightly outperforming SPYG, breaking the narrowing gap trend; on the same day, XLU surged 2.72%, XLP climbed 1.67%, XLI gained 1.77%, while XLK fell 1.42%. This suggests that the market is not simply retreating but reallocating positions from high-valuation growth stocks to sectors more resilient against volatility amid high oil prices and reflation constraints.

III. Market Sentiment

Sentiment shifted back from moderately bullish to cautious. The VIX closed at 19.31, up 2.06% from the previous trading day, indicating a resurgence in protective demand. The CNN Fear & Greed Index fell from 69 to 66, still in the relatively optimistic range but with reduced enthusiasm, meaning the previous day's risk-chasing sentiment following new highs started to fade.

Options also reflected similar changes. The latest Cboe total Put/Call ratio read 0.75, slightly higher than the previous day; the index Put/Call ratio was 1.06, and the equity Put/Call ratio was 0.64, showing institutions added more hedging at the index level while risk appetite contracted at the individual stock level. Overall, the market is far from panic, but tolerance for high oil prices and elevated valuations is declining.

IV. Market Scan

1. Index ETFs

Among index ETFs, IWM fell 0.35%, making it the most resilient sector of the day, while QQQ dropped 0.56%, suffering the deepest decline. All four major index ETFs retreated, but the Nasdaq clearly underperformed, indicating that Thursday's adjustment was not a typical 'broad risk-off' scenario but concentrated more heavily on tech and growth-weighted sectors.

2. Sector Performance

Defensive characteristics within industry sectors were clearer. XLU led gains with a 2.72% rise, while XLI climbed 1.77%, XLP rose 1.67%, and XLRE gained 1.15%, all on the stronger side. In contrast, XLK fell 1.42%, XLY dropped 1.00%, and XLF declined 0.79%, becoming the main drags. The overall structure indicates that amid rising oil prices and returning cost pressures, funds are gravitating toward sectors with steadier cash flows and less sensitivity to long-term discounting.

3. Seven tech giants

The seven major tech stocks continued to diverge internally, but overall remained weak. Apple rose 0.10%, the only stock in the group that managed to stay above the flatline; Microsoft fell 3.97%, Tesla dropped 3.56%, and Meta declined 2.31%, becoming the main sources of pressure. The tech-driven narrative has not been declared over, but the market is clearly raising its screening standards: stories requiring heavier capital expenditures and longer realization cycles are now being subject to higher risk discounts.

4. Chinese Equities

Chinese concept stocks came under overall pressure with significant declines. Baidu's 1.43% drop was relatively resilient within the group, while Alibaba fell 3.46%, Tencent Music dropped 3.44%, NetEase declined 3.29%, Futu fell 4.12%, and KWEB dropped 2.74%. This performance reflects a unified valuation contraction during a retreat in risk appetite, rather than being driven by events related to individual companies.

5. Cryptocurrencies

Cryptocurrencies and high-elasticity correlated assets retreated simultaneously. Bitcoin fell 0.47%, MSTR dropped 3.84%, COIN declined 4.03%, CRCL fell 4.17%, and HOOD dropped 5.53%. This indicates that when the market reconsiders high oil prices and tech valuation pressures, high-beta positions are often the first to be reduced, and risk appetite did not continue the previous day’s momentum of spreading towards elasticity.

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