Wall Street retreats after rally as rising US-Iran tensions hurt risk appetite
Wall Street’s main indexes retreated on Monday, after a stunning rally last week, as renewed U.S.-Iran tensions threatened a collapse of the two-week ceasefire and dented investor sentiment.
Iran is considering attending peace talks with the U.S. in Pakistan, a senior Iranian official told Reuters, following moves by Islamabad to end a U.S. blockade of Iran’s ports. However, a source said Vice President JD Vance was still in the U.S., denying reports he was on his way to Pakistan for talks.
Iran opened the Strait of Hormuz on Friday, fueling a broad market surge, with the S&P 500 and the Nasdaq posting record highs for a third straight session and marking their biggest weekly gains since May. However, it closed the waterway again over the weekend.
Oil prices jumped 5% on Monday, lifting the energy sector on the benchmark S&P 500 up 0.9%.
“The market is looking through what they’re seeing in the Middle East conflict. Part of that is because you get a headline one day, you get another the next day,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments.
At 11:41 a.m. ET, the Dow Jones Industrial Average fell 58.18 points, or 0.12%, to 49,389.25, the S&P 500 lost 23.56 points, or 0.33%, to 7,102.50 and the Nasdaq Composite lost 134.89 points, or 0.55%, to 24,333.59.
Tech stocks on the S&P 500 were the biggest weights on the index, with chipmakers at the helm of losses. The Philadelphia SE Semiconductor index lost 0.2%.
Countering some losses was a 4% gain in Marvell Technology after a report said Alphabet’s Google was in talks with the chipmaker to develop two new chips to run AI models more efficiently.
The S&P 500 consumer discretionary and communication services indexes were the biggest percentage decliners, dragged down by drops of about 1.6% and 2% in Amazon.com and Meta Platforms, respectively.
Meta is set to snap a nine-session winning streak, its longest since October. Amazon was among the biggest weights to the Dow.
The CBOE Volatility Index, known as Wall Street’s “fear gauge”, gained after falling for the past eight sessions and was last up 1.93 points at 19.42, a one-week high.
“It’s not surprising to see a small pullback today, but with some of the tailwinds that have been in the market… and the technicals that we’re seeing, the market is thinking things are in a pretty good place,” said Fernandez, adding that the focus was now on quarterly earnings.
Investors wait to assess the impact of the Iran war on corporate results and on the broader economy, with companies including Lockheed Martin and IBM scheduled to report later this week.
Tesla will kick off results from the so-called “Magnificent Seven” cohort on Wednesday.
Among other movers, QXO shares dipped 7.3% after the construction supplies distributor struck a $17 billion deal to acquire building products distributor and installer TopBuild, whose shares jumped 16.5%.
Advancing issues outnumbered decliners by a 1.05-to-1 ratio on the NYSE and by a 1.02-to-1 ratio on the Nasdaq.
The S&P 500 posted 39 new 52-week highs and no new lows while the Nasdaq Composite recorded 143 new highs and 29 new lows.