US stocks slipped on Monday as renewed tension between Washington and Tehran cooled risk appetite after last week’s rally. The S&P 500 and NASDAQ pulled back from record highs, while oil prices climbed after Iran again moved to restrict traffic through the Strait of Hormuz. Investors also tracked corporate movers, with Marvell rising on an AI chip report and QXO falling after its $17 billion TopBuild deal.
The S&P 500 and NASDAQ retreated after both indexes closed at record highs for three straight sessions last week. The pullback came as investors reacted to a fresh turn in the US-Iran conflict, which raised concern about the ceasefire path and the outlook for energy supplies.
Iran had reopened the Strait of Hormuz on Friday, and this move helped fuel a broad rally in global markets. However, sentiment changed after the United States said it had seized an Iranian cargo ship that tried to run its blockade. Iran then shut the waterway again, while its foreign ministry said on Monday that there were no plans for a second round of negotiations with Washington.
At 10:05 a.m. ET, the Dow Jones Industrial Average was little changed at 49,459.10. The S&P 500 fell 0.10% to 7,118.77, while the NASDAQ Composite dropped 0.24% to 24,408.51. Earlier reports also showed broader weakness across major indexes as investors reduced exposure to growth stocks and other risk assets.
Lizzy Galbraith, senior political economist at Aberdeen, said, “One explanation for this diplomatic whiplash is the power vacuum at the heart of the Iranian government.” She added, “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 rose sharply as traders assessed the risk of supply disruption through one of the world’s most important shipping routes. Brent crude climbed about 5% and traded near $95 per barrel, while US crude also posted gains. The move followed fears that Iran could keep petroleum shipments bottled up in the Persian Gulf if the standoff continues.
Even so, oil stayed below the peak levels seen earlier in the conflict. Brent had briefly traded above $119 per barrel when war fears were at their highest. This softer reaction suggested that some investors still expected the United States and Iran to return to talks and restore a more stable flow of oil to global markets.
Higher crude prices lifted energy stocks and pushed the S&P 500 energy sector up about 0.9%. At the same time, companies with large fuel costs came under pressure. Norwegian Cruise Line fell 5.1%, Carnival lost 1.4%, United Airlines slipped 2.4%, and American Airlines dropped 5%.
The CBOE Volatility Index, often called Wall Street’s “fear gauge,” also moved higher after falling for eight straight sessions. It last stood near 18.98, which marked a one-week high and showed that traders were pricing in more short-term caution.
Investors also kept their focus on quarterly results as earnings season gained pace. Data compiled by LSEG I/B/E/S showed analysts expected first-quarter earnings for S&P 500 companies to grow 14.4%, up from 13.7% a year earlier. FactSet data also showed that nearly nine out of 10 reporting companies had beaten profit estimates so far.
That earnings backdrop helped limit the broader sell-off. Goldman Sachs and JPMorgan Chase supported the Dow, while Apple rose 1.4% and helped offset weakness in other technology names.
Amazon and Meta each fell about 1.5%, which weighed on consumer discretionary and communication services.
Among individual movers, Marvell Technology gained 4.4% after reports that Google was in talks with the chipmaker to develop two new chips for more efficient AI model processing.
QXO fell 7.2% after announcing a $17 billion deal to acquire TopBuild, while TopBuild shares jumped 16.8% on the takeover news.
Markets now await results from Lockheed Martin, IBM, Tesla, UnitedHealth Group, and Procter & Gamble later this week, as investors assess whether corporate earnings can continue to support equities despite geopolitical stress.
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