The S&P 500 slipped Monday as escalating U.S.-Iran tensions offset a bullish revenue forecast from AI lab Anthropic that lifted chipmakers. The Dow fell more sharply than the S&P 500 and Nasdaq, while traders sharply pared back bets on a September Fed rate hike after soft inflation data.
The S&P 500 stayed muted on Monday as markets weighed tensions between the U.S. and Iran, even as a strong revenue forecast from AI lab Anthropic lifted some technology stocks. A senior Iranian official told Reuters that Tehran will escalate tensions in the Strait of Hormuz and the wider region if diplomacy with the United States fails, pointing to a policy shift toward offense rather than defense.
Iran tensions weigh on sentiment
Brent crude futures gained about 0.4%, with the S&P 500 energy index 0.2% higher. According to David Morrison, senior market analyst at Trade Nation: "(Investors) were telling themselves wars always come to an end."
AI optimism lifts chipmakers
Reuters reported Friday that Anthropic, which is preparing for its IPO, forecast 2028 revenue of roughly $190 billion to $200 billion, according to two people familiar with the company's financials. Chipmakers led the move, with Micron Technology and Sandisk rising 4.5% and 6.7%, respectively.
Technology stocks on the S&P 500 rose 0.1%, limiting broader declines and keeping the tech-heavy Nasdaq flat. Nvidia shares rose 0.2% in early trading, with markets watching its results next week for signs the tech-driven momentum can last.
At 09:40 a.m. ET, the Dow Jones Industrial Average fell 164.46 points, or 0.31%, to 53,567.95, the S&P 500 lost 10.71 points, or 0.14%, to 7,775.01, and the Nasdaq Composite shed 2.43 points, or 0.01%, to 26,726.73. Declines in UnitedHealth and McDonald's weighed on the Dow.
Fed rate-hike odds narrow
The S&P 500 closed at a record peak on Thursday after soft inflation data helped traders dial back the odds of an interest-rate hike by the Federal Reserve at its September meeting. Traders are now pricing in a nearly 31% chance the Fed will raise rates by 25 basis points next month, sharply lower than the near-even odds seen a week earlier, according to CME's FedWatch tool. Still, Wells Fargo Investment Institute changed its Fed call and now expects a 25-basis-point rate increase this year, versus no change anticipated earlier.
Quarterly results from Walmart and Home Depot, among the few retailers left to report this earnings season, will be watched this week. Declining issues outnumbered advancers by a 1.55-to-1 ratio on the NYSE and by a 1.43-to-1 ratio on the Nasdaq.
Source: Investing.com
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