Wall Street dipped from record highs on Monday after a South Korean ship was hit by an explosion in the Strait of Hormuz and Tehran demonstrated its grip on Middle East oil, dampening optimism about strong first-quarter earnings reports.

Energy stocks rose after the reports of the latest confrontations. An explosion reported aboard a South Korean merchant ship appeared likely to persuade commercial shippers it was still unsafe after U.S. President Donald Trump said the U.S. Navy would open the strait.

Tehran said it forced a U.S. warship to turn back after it attempted to enter the strait, while the UAE reported a fire at an oil installation following an Iranian drone attack.

Uncertainty related to the Middle East conflict weighed on U.S. stocks after the S&P 500 hit a record high last Friday amid a stronger-than-expected quarterly earnings season.

“With the market at all-time highs, there’s not a lot of room for error, and it feels like the kind of big asymmetric risk is still to the downside, even if it’s maybe not the most probable outcome that we get back into a hot war,” said Ross Mayfield, an investment strategist at Baird Private Wealth Management.

S&P 500 companies are expected to post aggregate earnings growth of 28% year/year for the first quarter, double the expectation of 14% at the start of April, according to LSEG I/B/E/S. Wall Street’s AI heavyweights account for much of that optimism.

Berkshire Hathaway reported on Saturday that it was a net seller of stocks for the 14th consecutive quarter. Investors closely watch the conglomerate, often viewed as a bellwether of the U.S. economy, for its insight into valuations and broader market conditions.

Shares of GameStop tumbled 8.5% and eBay rose 5.4% after the video game retailer unveiled a proposal to buy the online marketplace for about $56 billion in a cash-and-stock deal. GameStop’s stock market value is about $11 billion.

Major Markets Fall

The S&P 500 was down 0.33% at 7,206.53 points.

The Nasdaq declined 0.12% to 25,083.19 points, while the Dow Jones Industrial Average was down 0.91% at 49,050.99 points.

Ten of the 11 S&P 500 sector indexes declined, led lower by materials, down 1.37%, followed by a 0.89% loss in industrials.

Delivery firms FedEx and United Parcel Service fell about 9% each after Amazon.com said it was rolling out “Amazon Supply Chain Services,” opening up its logistics network for other businesses to use.

The declines in FedEx and UPS dragged the Dow Jones Transportation Average index 4.3% to its lowest level in nearly a month.

Cruise operator Norwegian dropped about 8% after slashing its annual forecast due to higher fuel costs related to the Middle East conflict.

Declining stocks outnumbered rising ones within the S&P 500 by a 2.1-to-one ratio.

The S&P 500 posted 26 new highs and 22 new lows; the Nasdaq recorded 115 new highs and 70 new lows.

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(Reporting by Noel Randewich in San Francisco; Additional reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing by Pooja Desai and Matthew Lewis)