U.S. stocks edged lower Monday as investors grew less confident that the Strait of Hormuz would reopen soon, pushing crude oil sharply higher and weighing on technology shares including Intel.
By yourNEWS Media Newsroom
U.S. stocks finished slightly lower Monday as fading hopes for an agreement to reopen the Strait of Hormuz renewed concerns about energy prices, inflation and the broader economic effects of the Middle East conflict.
The Nasdaq Composite fell 84.89 points, or 0.32%, to 26,605.73, according to preliminary data. The S&P 500 declined 4.74 points, or 0.06%, to 7,753.13, while the Dow Jones Industrial Average lost 71.77 points, or 0.13%, to close at 53,965.16.
Investor sentiment weakened as the prospects for reopening the Strait of Hormuz appeared to dim.
President Donald Trump demanded that Iran compensate people he said had been killed in wars, attacks and protests connected to Tehran.
Iran, meanwhile, called on Washington to meet several conditions, including compensating Tehran for damage caused since the United States and Israel began strikes on Iranian territory more than five months ago.
As optimism over a resolution declined, U.S. crude oil rose about 5% and settled at $82.13 per barrel.
A reopening of the Strait could ease concerns over elevated energy prices, which have contributed to inflation worries and raised questions about whether central banks may need to increase interest rates.
Tom Hainlin, an investment strategist at U.S. Bank Wealth Management in Minneapolis, said strong corporate earnings have continued to support equities, but geopolitical uncertainty remains a persistent influence on risk appetite.
“It’s record margins and record earnings. That’s just been the story of this market, and yet the overlay of the Iran conflict just pulls risk sentiment on and then pulls it off,” Hainlin said.
He said the clearest market impact has remained concentrated in energy prices.
“The direct impact is just the energy sector and … oil prices, and they’re just sticky here above where they were on February 27 before the conflict. So there’s clearly no transparency of the path to get back to where we were before the conflict started, and so that premium’s just being built in. So far, the world’s been able to work around it, but those workarounds don’t last forever.”
Technology shares also came under pressure.
Intel fell after the chipmaker said it planned to raise $15 billion through a share sale, contributing to broader weakness among semiconductor stocks.
Monday’s decline followed a record-high close for the S&P 500 on Friday, when stronger-than-expected corporate earnings helped lift the index.
Earnings results have remained broadly positive. About 85% of the 436 S&P 500 companies that have reported results so far this earnings period have exceeded analyst estimates, according to LSEG data.
Investors are also looking ahead to additional quarterly reports, including results from semiconductor company Applied Materials and networking equipment maker Cisco.
Attention will also turn to economic data later this week for clues about the Federal Reserve’s next move.
A report Friday showed U.S. employers unexpectedly shed 23,000 jobs in July, prompting traders to reduce expectations for a September interest-rate increase.
Markets are now pricing in a 52% probability of a Federal Reserve rate hike in September, according to the CME FedWatch tool.
Original article
Comments