The S&P 500 and the Nasdaq eased from record highs on Monday, after a stunning rally on Wall Street last week, as renewed U.S.-Iran tensions threatened a ceasefire collapse and dented investor sentiment.
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, Tehran closed the waterway again after the U.S. said it had seized an Iranian cargo ship that tried to run its blockade. Iran’s foreign ministry said on Monday there were no plans for a second round of negotiations with the U.S.
“One explanation for this diplomatic whiplash is the power vacuum at the heart of the Iranian government. It may also be that both sides are increasing their leverage ahead of the next round of talks while still fundamentally in search of a deal,” said Lizzy Galbraith, senior political economist at Aberdeen.
“Progress towards a lasting ceasefire and the reopening of the Strait of Hormuz remains a case of two steps forward, one step back.”
Oil prices jumped 5% on Monday, lifting the energy sector on the benchmark S&P 500 up 0.9%.
At 10:05 a.m. ET, the Dow Jones Industrial Average rose 11.67 points, or 0.01%, to 49,459.10, the S&P 500 lost 7.29 points, or 0.10%, to 7,118.77 and the Nasdaq Composite lost 59.97 points, or 0.24%, to 24,408.51.
Gains in Goldman Sachs and JPMorgan Chase buoyed the Dow.
The S&P 500 consumer discretionary and communication services indexes were the biggest weights, dragged down by declines of about 1.5% each in Amazon.com and Meta Platforms, respectively.
Tech stocks on the S&P 500 were subdued, with losses countered by a 1.4% gain in Apple.
Marvell Technology advanced 4.4% after The Information reported on Sunday that Alphabet’s Google was in talks with the chipmaker to develop two new chips to run AI models more efficiently.
The CBOE Volatility Index, known as Wall Street’s “fear gauge”, gained after falling for the past eight sessions and was last up 1.50 points at 18.98, a one-week high.
The small-cap Russell 2000 index was subdued after notching a record high on Friday.
Quarterly earnings will be in focus as 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.
Data compiled by LSEG I/B/E/S expects first-quarter earnings from S&P 500 companies to grow 14.4%, compared with 13.7% a year ago.
Among other movers, QXO shares dipped 7.2% after the construction supplies distributor struck a $17 billion deal to acquire building products distributor and installer TopBuild , whose shares jumped 16.8%.
Declining issues outnumbered advancers by a 1.05-to-1 ratio on the NYSE and by a 1.13-to-1 ratio on the Nasdaq.
The S&P 500 posted 28 new 52-week highs and no new lows while the Nasdaq Composite recorded 103 new highs and 24 new lows.
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Reporting by Purvi Agarwal and Avinash P in Bengaluru
This article originally appeared on The Detroit News: S&P 500, Nasdaq retreat as U.S.-Iran tensions dampen sentiment
Reporting by Purvi Agarwal and Avinash P, Reuters / The Detroit News
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