Wall Street Highlights: S&P 500, Nasdaq Tumble As US-Iran Stalemate Stokes Inflation Concerns

The Nasdaq 100 Index closed 1.1% lower in New York while the S&P 500 Index slid 0.8%. Both indexes ended the session at their lowest in 10 days. Brent crude hovered at around $106.

Traders have been trying to make sense of mixed signals on US-Iran ceasefire talks. Stocks pared steeper declines earlier on a report that US President Donald Trump is willing to give Iran sanctions relief for nuclear progress. However, Trump rejecting Iran's latest proposal to reopen the Strait of Hormuz deepened a selloff in the US government bond market on Monday.

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Iranian officials have privately expressed pessimism about reaching a deal to end hostilities with Washington and reopen the crucial waterway before US midterm elections in November.

"The three-headed monster is scaring the market today," said David Waddell, chief investment strategist at Coastal Bridge Advisors, when discussing the pullback in major US stock indexes in an interview. "That's higher interest rates, higher oil prices, and the higher dollar. Very hard for the market to rally, in light of those three variables rising."

Equity markets seem worried about future consequences of higher interest rates, according to Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management. Daily moves in rates are increasingly driving the overall performance of the market, he added.

"Higher interest rates create both opportunities and challenges for investors," he said. "Despite the consternation surrounding their rise, bonds offer more attractive entry points today than at any time in nearly 20 years, assuming the Fed keeps inflation in check."

Busy Week Ahead

The week is filled with key economic reports that are expected to add evidence that the US economy is strengthening. That would bolster the case made by several Fed officials that interest rates should be higher. Tuesday will get the ball rolling, with consumer confidence data for September and August JOLTS data. Key jobs numbers will be released on Friday.

Also likely to be in focus is the state of the artificial intelligence trade, with Micron Technology Inc. scheduled to report results on Wednesday after the market close. Kathleen Brooks, research director at XTB, noted that stocks linked to the theme have been "swinging between two extremes" over the last few weeks.

"Investors will be watching margins, revenue, projected demand and earnings," Brooks said of Micron's results. "Margins are particularly in focus due to surging memory costs."

Among single-stock moves, Nvidia Corp. gained after boosting its share buyback plan by a record $150 billion. MongoDB Inc. shares plunged after Meta Platforms Inc. tapped its president and chief executive officer to lead a new AI platform for enterprise customers.

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Sectors in Focus

• Shares of precious metals miners are mostly lower, following a drop in gold and silver prices.
• American Express Co. is among the financial companies likely to grapple with increasing headwinds as the Federal Reserve has turned hawkish and is expected to raise interest rates three to four more times through the end of next year, TD Cowen's Moshe Orenbuch says.
• American steel stocks are falling on Monday as President Donald Trump announced plans for a $15 billion Mesabi Metallics steel plant in Iowa that would produce 10 million tons of steel a year with steelmaking beginning by 2030.
• The iShares Expanded Tech-Software Sector ETF fell after Meta introduced the Meta Enterprise Platform, that is designed to bring the company's Muse AI agent product to more businesses and developers.