The S&P 500 Index ended a choppy session on Monday near where it started trading, with swings in oil prices setting the tempo during the day as investors parsed mixed signals around US-Iran peace talks. Ten-year Treasury yields steadied below 4.6%, while semiconductor stocks traded lower.
The S&P 500 Index fell less than 0.1%, while the tech-heavy Nasdaq 100 Index dropped 0.4% and the Philadelphia Stock Exchange Semiconductor Index, known as the SOX, shed 2.5%. Micron Technology Inc. lost 6% as investors watched for labor action at rival Samsung Electronics that could disrupt memory-chip supplies. Nvidia Corp., ahead of results due later this week, fell 1.3%.
Softness in equities and elevated bond yields sets up "tech momentum" stocks for declines ahead of Nvidia's late Wednesday results, according to Jefferies trader Jeffrey Favuzza. He also pointed to S&P 500 and Nasdaq 100 volume that was a "touch light" compared with 20-day averages. Flows are "far from panicky," he said, instead indicating some "buyer exhaustion."
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West Texas Intermediate crude oil rose about 0.8% to trade at around $106. Axios reported that Iran was said to have given an updated deal proposal for ending the war, but the White House believes it was insufficient. Meanwhile, President Donald Trump posted on Monday afternoon that he has called off a strike on Iran planned for Tuesday while negotiations proceed.
Monday's decline marked the first back-to-back drop for the S&P 500 this month, with rising government bond yields, hotter-than-expected inflation readings and elevated oil prices all combining to dent investors' appetite.
"Strong equity markets (outside of Friday's sell-off), upside inflation surprises, and resilient growth likely cannot coexist indefinitely," Wolfe Chief Economist Stephanie Roth wrote in a Monday note. Roth's view is that "rates likely continue repricing higher until either growth weakens, equities begin to crack more materially, or Trump reaches his pain threshold and takes a deal with Iran."
With the price of diesel now 62% higher than last April, "we expect the repercussions of the energy shock to affect all aspects of consumer behavior, and especially household spending on food," RSM US LLP chief economist Joseph Brusuelas wrote. He sees near-term inflation of 4.5%, with "risk of a faster pace" depending on whether the Strait of Hormuz stays largely closed.
Even so, Viktor Shvets, head of global desk strategy at Macquarie Capital, said that "inflation might not derail equities." Investors are wrestling with long-term "Information Age"-driven disinflation that's being "regularly offset by strong inflationary spikes," Shvets wrote in a note.
"There's no arguing that the market may be 'due' for a pause," Bespoke Investment Group wrote in a Monday note. Yet Bespoke highlighted the S&P 500's seven-week winning streak as of Friday, writing that such runs have in the past been followed by above-average returns.
Lagging software giant Microsoft Corp. was the top gainer among Bloomberg Magnificent Seven members on Monday, with a 0.4% climb. Earlier, a jury rejected Elon Musk's claims that OpenAI under Sam Altman's leadership betrayed its mission to benefit the public, finding that he waited too long to sue the company. The stock is still down 12% so far this year.
In merger news, NextEra Energy Inc. was said to be discussing a mostly-stock deal for Dominion Energy Inc. that would value the company at around $66 billion, making it by far the largest power deal on record. Dominion jumped 9.4%.
In biotech news, Regeneron Pharmaceuticals Inc. sank as much as 13% after data showed metastatic melanoma trial results fell short of expectations.
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Walmart Inc., which also reports this week, advanced 1%. Investors are looking for signals about consumer health as gasoline and other prices climb.
Sectors in focus:
- Tech as companies presented at JPMorgan's Global Technology, Media and Communications Conference.
- Space-related stocks like EchoStar Corp., Rocket Lab and AST SpaceMobile were mixed after Elon Musk said he's back in Texas working on plans for an initial public offering of SpaceX.
- Companies discussed in Berkshire Hathaway Inc.'s first filing under newly installed Chief Executive Officer Greg Abel, like Delta Air Lines Inc. and Macy's Inc., were moving. UnitedHealth Group Inc. slipped after the firm exited. Berkshire also boosted holdings in Alphabet Inc. and shed Amazon.com Inc.
- Energy stocks churned along with oil as investors watched Iran news. Shares of fuel-hungry travel companies, including American Airlines Group Inc. and Carnival Corp., had climbed after oil prices moved broadly lower.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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