U.S. stocks closed lower on Thursday, with the Dow Jones Industrial Average falling more than 260 points. Investors pulled funds out of the financial sector and closely monitored escalating tensions between the U.S. and Iran, nearly erasing the S&P 500's year-to-date gains.

The Dow declined by 267.50 points, or 0.54%, to close at 49,395.16. The Nasdaq Composite dropped 70.91 points, or 0.31%, ending at 22,682.73. The S&P 500 fell 19.42 points, or 0.28%, settling at 6,861.89.

As of Thursday's close, the S&P 500's year-to-date gain narrowed to just 0.2%, while the Dow remained up more than 2%. However, the technology-heavy Nasdaq Composite has fallen over 2% so far in 2026.

Private markets and alternative asset management firm Blue Owl Capital announced it would tighten investor liquidity after selling $1.4 billion in loan assets, sparking concerns over potential losses in the opaque private lending sector. Investors rapidly exited private credit positions, sending Blue Owl's stock down 6%. Other firms like Blackstone Group and Apollo Global Management also saw declines of around 5%.

Beyond asset managers, the software sector also faced pressure. Salesforce shares fell more than 1%, Intuit dropped over 2%, and Cadence Design Systems declined nearly 3%. The sector has recently become a pain point for the market as investors worry that artificial intelligence could disrupt the software industry.

In fact, Mistral AI CEO Arthur Mensch suggested that more than 50% of corporate software could eventually be replaced by AI technology.

Wall Street remained on alert as rising tensions over Iran's nuclear program pushed oil prices higher.

U.S. President Donald Trump stated on Thursday that he would decide within the next 10 days whether to launch a military strike against Iran. Speaking at the inaugural Peace Commission meeting, he said, "We may need to go further now, or we may not. Perhaps we'll reach a deal—we'll know in the next 10 days."

Walmart shares fell more than 1% after the company's full-year profit outlook fell short of expectations, overshadowing better-than-expected fourth-quarter results and adding to market pessimism.

Commenting on recent market movements, Antonio Rodrigues, an investment officer at Procyon, described it as "confirming a rotation in market leadership." He added that "we need to see the bottom 490 stocks in the S&P 500 begin to show earnings momentum."

Rodrigues specifically highlighted the industrial and consumer discretionary sectors, suggesting they "could benefit from efficiency gains driven by some AI spending." He also noted that "all themes related to the power grid still hold potential," emphasizing that "significant infrastructure projects are still underway—these are multi-year, even multi-decade investment trends."