U.S. stocks opened slightly lower on Monday, with the Dow Jones Industrial Average falling 0.09%, the S&P 500 losing 0.07%, and the Nasdaq Composite dropping 0.04%. The decline reflects growing skepticism that the U.S. and Iran can reach a lasting conflict resolution in the near term.
Intel Corp. shares dropped 3.8% at the open after the company announced plans to issue $15 billion in common stock. Meanwhile, Iran signaled it may reach an agreement with Oman to reopen the strategic Strait of Hormuz, but Tehran insists that direct talks with the U.S. are off the table unless Washington meets multiple conditions and compensates for what it calls "breaches" of a June memorandum of understanding. According to Iran's semi-official Tasnim News Agency, which is affiliated with the Islamic Revolutionary Guard Corps, Foreign Minister Abbas Araghchi stated on Sunday that as long as the U.S. continues to violate the June agreement and fails to compensate for its "defaults," restarting negotiations is not possible.
Market uncertainty persists, pushing oil prices higher on Monday. U.S. West Texas Intermediate crude futures rose 1% to around $79 per barrel, while international benchmark Brent crude gained 1% to approximately $84 per barrel. Last week, U.S. Treasury Secretary Scott Bessent strongly signaled in an interview that a deal was imminent. However, President Donald Trump told Axios on Sunday that talks between the U.S. and Iran are only "half-hearted," and he aims to keep economic pressure on the Middle Eastern nation.
Despite Monday's dip, the three major U.S. indexes posted their best weekly performance since April. The S&P 500 closed at a record high on Friday, buoyed by a surprise contraction in July non-farm payroll data, which led investors to anticipate that the Federal Reserve may pause its rate-hiking cycle. According to the CME FedWatch Tool, fed funds futures traders now price in about a 44% probability of a rate hike at the Fed's September meeting, down from 67% a week ago.
Traders are closely watching this week's consumer price index (CPI) and producer price index (PPI) releases for fresh inflation signals. No major economic data is scheduled for Monday. Investors are also awaiting earnings reports from several companies this week, including consumer-facing firms On Holding AG and Cava Group Inc., as well as technology companies Super Micro Computer Inc. and CoreWeave Inc.
Asian markets mostly closed higher on Monday, tracking Friday's gains on Wall Street. Japan's Nikkei 225 rose 2.1% to 66,970 points, Hong Kong's Hang Seng Index gained 1%, South Korea's Kospi added 0.65%, and the small-cap Kosdaq index surged 7%. European markets opened largely flat on Monday as investors weighed the uncertainty surrounding the key shipping route. The UK's FTSE 100 fell 0.1%, France's CAC 40 was flat, and Germany's DAX rose 0.1%.
Global stock markets have been hitting record highs recently, driven by strong corporate earnings. Analysts at Bank of America note that nearly 90% of S&P 500 companies have reported results. Excluding the impact of investment gains from Alphabet Inc. and Amazon.com Inc., earnings per share (EPS) rose 30% year-over-year. Additionally, 76% of S&P 500 companies have beaten earnings expectations, one of the highest rates since 2021.
JPMorgan Chase & Co. on Monday raised its year-end target for the S&P 500 to 8,000 points from 7,800, citing a robust corporate earnings outlook and growing confidence that AI investments by large hyperscale cloud providers will drive faster revenue growth. The new target implies about 3.1% upside from the index's last closing level of 7,757.64 points, joining a growing bullish wave with at least seven brokerages now expecting the benchmark to reach 8,000 by the end of 2026. JPMorgan analysts said, "As high backlogs convert into recognized revenue, cloud growth should be well-supported, helping to validate growing AI capital expenditures, strengthen order coverage, and further alleviate concerns about return on invested capital (ROIC)." The brokerage also raised its 2026 EPS estimate for the S&P 500 to $365 from $350, and its 2027 estimate to $420 from $390.
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