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US INDEXES FALL WITH ANGST ABOUT IRAN AND SOFTWARE COUNTERING CHIP BOOST

Wall Street's three major equity indexes closed lower on Thursday as investors were rattled by the latest headlines about the Middle East war and diminished hopes for peace. They also fled from software stocks after weak earnings, but instead turned their focus on the chip industry after results and guidance from Texas Instruments TXN.O impressed.

The indexes had a choppy afternoon as investors were torn between worries about the prospects for U.S.-Iran talks and news that Iran had activated air defenses, which was followed by an announcement that it was acting after detecting small drones at several locations across the country.

Meanwhile, U.S. President Donald Trump said a deal with Iran will only be made when it is "appropriate and good" for the United States.

"The market's very sensitive to anything emanating from the Middle East in terms of the ongoing conflict and potential ceasefire progress," said Michael James, an equity sales trader at Rosenblatt Securities. He attributed some of the afternoon's volatility to "a number of unconfirmed rumors having to do with Iran." And it didn't help that oil prices settled up more than 3% on the day.

The trader also said that "earnings were definitely having an impact" on investor moods on Thursday.

Starting with the positive, the Philadelphia Semiconductor Index .SOX rose 1.7% and extended its record winning streak to 17 days based on LSEG data going back to mid-1994. Its biggest gainer was Texas Instruments, which ended up 19.4% for its biggest one-day rally since the year 2000. The chip maker forecast second-quarter revenue and profit above Street expectations in anticipation of a boost in demand for its analog chips amid the data center boom.

This in turn helped boost a bunch of other analog chip companies with Microchip MCHP.O and ON Semiconductor ON.O rising nearly 10% while NXP Semiconductors NXPI.O jumped 6.8% just ahead of more than 5% gains in Analog Devices ADI.O, Rambus RMBS.O and Marvell Technology MRVL.O.

However, the software sector was the polar opposite with results from IBM IBM.N and ServiceNow NOW.N sending investors clamoring for the exits. While software companies have been under massive pressure since October, recent gains in the sector had been kindling hopes for a bottom among investors.

But the iShares Expanded Tech-Software ETF IGV.N sank 5.8% on Thursday, erasing a hefty chunk of the almost 19% gains it has seen in the last eight sessions.

Here is your closing snapshot:

(Sinéad Carew, Terence Gabriel)

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