The S&P 500 index edged lower on Monday, as investors weighed the outlook for interest rates and geopolitical uncertainty following a strong week of corporate earnings. In the final stretch of the earnings season, chipmakers are set to report results, which could provide fresh fuel for the ongoing debate over stock valuations.
Six of the 11 S&P 500 sectors closed slightly higher, with energy stocks leading the gains, lifted by rising oil prices. The energy sector posted its biggest gain since April 2025 as the resumption of traffic through the Strait of Hormuz remained blocked. Interactive Brokers Chief Strategist Steve Sosnick noted that the market was "broadly unchanged" on Monday, adding that "with yields and oil prices moving slightly higher, the market is leaning slightly to the downside."
U.S. President Donald Trump has called for economic pressure on Iran to force the reopening of the Strait of Hormuz, and later publicly rejected Iran's demands for war reparations. Applied Materials, Lumentum Holdings Inc., and Cisco are set to report earnings in the coming days, with investors seeking clues on the AI trade and chip valuations. Market participants are also awaiting the latest CPI and PPI inflation data this week to gauge the Federal Reserve's interest rate path.
The robust earnings season so far has bolstered confidence in the bull market. Strategists at JPMorgan, led by Dubravko Lakos-Bujas, raised their year-end 2026 target for the S&P 500. The market may need time to digest last week's gains. Charles Schwab Managing Director of Derivative and Research Strategies Nathan Peterson said that, given the strength of the previous week, "on a very short-term basis, the market is overbought," but he noted that "upside momentum remains," suggesting the long-term outlook still favors bulls.
The Cleveland Fed President told Yahoo Finance that multiple rate hikes may be needed to bring inflation down to the Fed's 2% target. Nvidia fell 2.9%, following the announcement of a partnership with Wall Street investment giants to plan a $500 billion financing package. At the close, the S&P 500 was down 0.1% at 7,753.11 points, the Dow Jones Industrial Average fell 0.1% to 53,975.98 points, the Nasdaq Composite dropped 0.3% to 26,605.36 points, the Nasdaq 100 declined 0.3% to 29,621.8 points, and the Russell 2000 index slipped 0.6% to 3,017.397 points.
Comments