Software Cracks | Hormuz Shuts Down | AmEx Still Spending

The market felt heavy into the close. Not a selloff, but something started to slip. The S&P 500 and the Nasdaq Composite both dropped roughly 0.40%.

Software broke first and set the tone. ServiceNow (NOW) dropped 17% after disclosing the war directly cut its subscription revenue. IBM (IBM) fell 8% after flat guidance. Microsoft (MSFT) added steady pressure all day. At the same time, semis pushed higher and held momentum. That split kept the index from slipping further.

Oil stayed elevated even after a late pullback. Costs are still pressing on margins across sectors.Tesla dropped 3.3% after Wednesday's capex announcement repriced the spending trajectory alongside the software weakness.

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Iran fired on commercial ships in the Strait of Hormuz Thursday afternoon. Two vessels were seized. Only one ship was observed moving through the waterway all day. Another tanker turned back after Iranian forces opened fire.

This is a qualitative escalation. Iran isn't just threatening traffic anymore. It is physically taking control of vessels. The ceasefire extension the equity market has been pricing all week just became much harder to trade.

Here's what changed with today's seizures:

Every day the strait stays closed moves that clock forward. The week started with diplomatic collapse. It is ending with Iran holding two ships.

The Escalation 

Watch whether U.S. forces respond to the seizures directly or through additional blockade pressure. That response defines oil price movement over the next 48 hours and determines whether this week's ceasefire framework survives at all.

American Airlines (AAL) cut its 2026 full-year earnings forecast Thursday. The company now projects results ranging from a $0.40 loss to $1.10 earnings. In January the forecast was $1.70 to $2.70 earnings. That's a swing of roughly $2 per share at the midpoint in a single revision.

Q1 revenue was a record. Q2 revenue guidance is also expected to be record. Yet the full year is approximately breakeven because $4 billion in added fuel costs absorbs every gain. That is not a weak carrier failing. That is the math of doubled fuel prices applied to an industry that cannot pass the full cost to customers fast enough.

Four carriers have now reported in 72 hours. United cut nearly in half. Alaska pulled guidance entirely. Southwest guided below consensus. American swung to near breakeven. The verdict is unanimous across every carrier type.

The Math 

Record revenue. Near-zero profit. That's what $4 billion in extra fuel costs looks like at an airline. Watch Delta when it reports. Its premium customer base is the most insulated in the industry. Its guidance is the final test.

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SpaceX's S-1 filing was reviewed ahead of its planned summer IPO. The company claims a total addressable market of $28.5 trillion. More than 90% of that number, roughly $26.5 trillion, comes from AI. Enterprise AI alone accounts for $22.7 trillion of the total.

That claim is in a legal filing. It is explicit. SpaceX is telling Wall Street this is an AI company that also has rockets. Not the other way around.

Here's what else the S-1 revealed:

One source told Reuters: if you value only what you can see, you are nowhere near $1.75 trillion.

The filing acknowledges the TAM figures require execution against timelines SpaceX has not yet defined.

The Valuation Test 

Analyst notes from Thursday's Memphis session will stress-test the TAM math before the roadshow opens. That's where the $1.75 trillion either gets justified or quietly revised downward.

Two consumer data points this week told opposite stories. Retail sales beat because gasoline costs more. AmEx beat because premium customers are choosing to spend more.

American Express (AXP) reported Q1 net income beating estimates. Revenue rose 11%. Cardmember spending grew at its highest rate in three years. Luxury retail spending was up 18%. Restaurant spending rose 9%. The company kept its full-year guidance intact.

CEO Stephen Squeri was direct about his customer base: "It's not every millennial and Gen Z, it's the cream of the crop." Consumer stress is real. It is just not evenly distributed across income levels.

The Divergence 

Premium consumers are largely insulated from fuel cost shock as a share of income. Mass-market consumers are not. Watch Visa and Mastercard when they report. AmEx is the early read on whether premium spending holds across the whole card network.

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While public Gulf bond markets have been effectively closed since February, Pimco has been writing checks. The asset manager lent more than $10 billion to Gulf state governments via private placements since the war began. That's the majority of all hard-currency private bonds issued by Gulf governments during the conflict. 

Pimco opened a Dubai office last year. It intends to hold these bonds long term. The same week it lent $10 billion to Gulf governments, it also bought all of a $400 million Blue Owl Capital bond, the anchor buyer for private credit's return to public markets. One institution anchoring both the Gulf sovereign debt market and the private credit reopening simultaneously is not coincidence. It is a thesis.

Iran seized two vessels in Hormuz on the same afternoon Pimco's $10 billion Gulf bet sits on the books. The bet pays off if the ceasefire eventually holds. It gets stressed if the strait stays closed long enough to impair sovereign revenues.

The Wartime Bet 

Watch whether Pimco or any major institutional investor comments publicly on today's seizures. Silence or statement will tell you whether the wartime credit thesis is being stress-tested in real time right now.

Iran seized two ships and strait traffic stopped. Four airlines confirmed the same fuel cost verdict in 72 hours. SpaceX told Wall Street it is an AI company in a legal filing. AmEx showed premium consumers are still spending. And Pimco's $10 billion Gulf bet is now directly exposed to the escalation it was written around. The week ends harder than it started.