The S&P 500 Index ($SPX) (SPY) closed down 0.19% on Monday, while the Dow Jones Industrial Average ($DOWI) (DIA) fell 0.59% to its lowest level in three weeks.
The Nasdaq 100 Index ($IUXX) (QQQ) managed a slim gain of 0.04%, as short covering in chipmakers and AI-infrastructure stocks provided modest support ahead of major earnings this week.
Rising crude oil prices were the primary driver of Monday’s pressure on equities, with WTI crude (CLQ26) climbing to a 5-week high amid escalating US-Iran tensions.
The US conducted a ninth consecutive day of airstrikes on Iran, targeting military infrastructure and communications networks in an effort to reopen the Strait of Hormuz.
Iran retaliated by launching drones and missiles at US bases in Kuwait, Jordan, Bahrain, and Iraq, while also attacking tankers transiting the Strait of Hormuz.
The New York Times reported that the US is sending additional warplanes to the region, including F-35 and F-16 fighter jets, signaling that military operations could expand in the days ahead.
President Trump vowed that Iran “will pay” for killing three US soldiers in recent days, with his social media post accelerating losses in Treasury notes.
Houthi rebels compounded geopolitical anxiety by announcing a maritime blockade on Saudi Arabia, threatening crude exports through the Red Sea and further tightening global oil supply concerns.
The 10-year T-note yield rose nearly 5 basis points to 4.596%, pressuring rate-sensitive sectors including home builders, with DR Horton (DHI), Pulte Group (PHM), KB Home (KBH), Toll Brothers (TOL), and Builders Firstsource (BLDR) all closing down more than 2%.
Sentiment briefly improved after Iran signaled it would not abandon diplomacy, with Qatar and Pakistan reportedly proposing a 10-day ceasefire between the US and Iran.
Forecasts compiled by Bloomberg Intelligence suggest Q2 earnings may increase by 23%, close to Q1’s blowout growth of 30%, which was more than double the 12% analysts had originally expected.
AI infrastructure stocks are expected to contribute nearly 60% of S&P 500 earnings-per-share growth in Q2, underpinning optimism in the technology sector despite the broader geopolitical headwinds.
Among notable movers, Iren Ltd (IREN) surged more than 19% after raising its year-end AI-cloud revenue estimate to more than $4 billion, up from a prior estimate of $3.7 billion.
Galaxy Digital Holdings (GLXY) and MARA Holdings (MARA) each closed up more than 9% as Bitcoin climbed to a 1-month high, lifting cryptocurrency-exposed stocks broadly.
Global Payments (GPN) gained more than 5% to lead S&P 500 gainers after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $100.
Warner Bros Discovery (WBD) fell more than 3% after a federal judge temporarily paused Paramount Skydance Corp’s takeover of the company, ruling it “likely” violates antitrust law.
Penguin Solutions (PENG) dropped more than 11% after Barclays downgraded the stock to underweight from equal weight with a price target of $40.
LXP Industrial Trust (LXP) closed up 4% after Brookfield Asset Management and CPP Investments agreed to acquire the company for $5.2 billion, or approximately $61.20 per share.
Markets are currently pricing in a 17% chance of a 25 basis point rate hike at the next FOMC meeting scheduled for July 28-29, adding another layer of uncertainty for investors navigating an already volatile macro environment.
