U.S. stocks closed broadly lower on Tuesday, as tentative signs of a potential agreement to reopen the Strait of Hormuz failed to alleviate deeper investor concerns about the broader U.S.-Iran conflict. The Dow Jones Industrial Average fell 184.13 points, or 0.34%, to 53,791.85. The Nasdaq Composite dropped 159.91 points, or 0.60%, to 26,445.45. The S&P 500 Index declined 24.91 points, or 0.32%, to 7,728.20.
Oil prices remained volatile but steady as the outlook for the Middle East conflict remained unclear. Iran expressed optimism about reaching an agreement with Oman to restart traffic through the Strait of Hormuz, but Tehran maintained its stance that direct negotiations with the U.S. are off the table until its conditions are met. According to Iran's semi-official Tasnim news agency, Foreign Minister Abbas Araghchi stated on Sunday that as long as the U.S. continues to violate the June memorandum of understanding and refuses to compensate Iran for its breaches, there is "no possibility" of restarting U.S.-Iran talks.
International oil prices rose on Monday. West Texas Intermediate crude for September delivery climbed $1.07 to settle at $83.20 per barrel, a gain of 1.3%. Brent crude for October delivery rose $1.19 to close at $88.91 per barrel, up 1.36%.
In Asian markets, South Korea's KOSPI index gained 0.73%, and Australia's S&P/ASX 200 added 0.19%. Hong Kong's Hang Seng Index fell 1.03%, while China's mainland CSI 300 Index dropped 0.79%. Japanese markets were closed for a holiday.
European stocks ended mixed as investor optimism over a short-term reopening of the Strait of Hormuz waned. The pan-European Stoxx 600 edged up 0.06%, the Euro Stoxx index rose 0.29%, and eurozone blue chips gained 0.26%. The UK's FTSE 100 slipped 0.17%, Germany's DAX advanced 0.27%, France's CAC 40 fell 0.13%, and Spain's IBEX 35 added 0.2%.
NVIDIA's bonds faced renewed selling pressure overnight. The company announced it had partnered with six major financial institutions, including BlackRock, Apollo Global Management, and Goldman Sachs, to launch a financing plan for artificial intelligence infrastructure exceeding $500 billion. However, NVIDIA did not provide further details on the specific terms of the financing, the scale of investment commitments, or how the $500 billion would connect with existing arrangements.
IG market analyst Tony Sycamore commented, "Part of me wonders if this feels a bit like the period before the subprime mortgage crisis, when those loans were just becoming mainstream, an innovation that ultimately triggered a global financial crisis." This concern was reflected in the market as NVIDIA's bonds were again sold off. The yield on NVIDIA's 2% bond due in 2032 rose to 4.887% on the Tradegate platform, an increase of nearly 7 basis points from Monday.
Meanwhile, Intel raised $20 billion through a stock offering, marking its first equity issuance since going public in 1971. Shares of Intel rose about 1%.
According to data tracked by think tanks, the second-quarter earnings per share (EPS) for S&P 500 companies grew approximately 32% year-over-year, following a 30% profit increase in the previous quarter. The market expects earnings growth to remain above 20% for the next two quarters. A strategy team led by Savita Subramanian at Bank of America noted that such a strong profit growth cycle is rare, having occurred only 10 times since 1936.
Market attention now shifts to a series of key inflation data. The U.S. Consumer Price Index (CPI) for July is due on Wednesday, followed by the Producer Price Index (PPI) on Thursday. These figures carry significant weight, as the weaker-than-expected nonfarm payrolls report has introduced uncertainty into the Federal Reserve's policy outlook.
The inflation data could put the Fed in a difficult position. A rebound in oil prices is reigniting inflation fears, while a notable slowdown in job growth is raising questions about the resilience of consumer spending and the broader economy. Dennis Vollmer, Chief Investment Officer at Montrose Financial, commented, "I expect the CPI to continue its downward trend, which would further support the Fed in keeping rates steady rather than raising them. Last Friday's weak employment report won't change this narrative." He added, "Services inflation remains sticky, but that sector is less sensitive to interest rates, so it's unlikely to alter the policy logic of holding rates steady."
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