Wall Street’s main indexes fell on Monday after President Donald Trump rejected an Iranian proposal to end the conflict, leading to a spike in crude prices that revived inflation worries and drove Treasury yields higher.
Offsetting broader market gloom was Nvidia’s 3.2% gain after the chip giant announced a $150 billion share repurchase authorization, making it the company’s biggest ever increase in share buybacks on record.
Iran announced a peace proposal at last week’s United Nations General Assembly in New York, saying it had been relayed to the United States through Qatari mediators. While Trump said on Saturday, he had rejected the offer, he told Axios on Sunday that he expected US negotiators to continue talks this week.
Crude prices jumped 2% to around $107-a-barrel and weighed on Treasuries, sending longer-dated yields to fresh multi-decade highs.
“Energy has been the one consistent upward pressure on inflation, and anything that continues to put pressure on inflation is going to be something that motivates the Fed to raise rates,” Art Hogan, chief market strategist at B. Riley Wealth.
At 09:51 a.m. ET, the Dow Jones Industrial Average fell 245.02 points, or 0.47%, to 51,583.60, the S&P 500 lost 36.08 points, or 0.46%, to 7,707.50 and the Nasdaq Composite lost 175.16 points, or 0.65%, to 26,893.56.
Consumer Discretionary fell 1.3% and led sectoral declines on the S&P 500, with DoorDash and Carvana down 6% and 5%, respectively.
Investors got some relief on the trade front following the conclusion of the Sino-US summit last week where the trade partners agreed to cut tariffs imposed on $60 billion worth of goods imported from each other. The countries also agreed to a two-month extension of their trade truce through to January 10.
As the week progresses, the spotlight will be on a slew of crucial economic indicators at a time when traders are pricing in a 68% chance that the Federal Reserve will hike interest rates by at least 25 basis points back-to-back in October, the CME Group’s FedWatch Tool showed.
“Any historical instance of the Fed hiking into a short-term supply shock has always ended poorly. And the Fed is being impatient. They shouldn’t have hiked in September. They could potentially make the same mistake in October,” said Thomas Hayes, chairman at Great Hill Capital.
The Personal Consumption Expenditures Index for August and the Non-Farm Payrolls report for September, both due this week, could help investors gauge the path for monetary policy by the Fed this year.
Policymakers Michelle Bowman, Lisa Cook and Thomas Barkin are due to speak later on Monday and could reiterate the hawkish shift in policy at the central bank since the previous meeting.
Tesla dipped 2.7% after brokerage J.P.Morgan lowered its price target on the stock, citing weak deliveries in the third quarter. Meta eased nearly 4% from last week’s 13% jump.
Declining issues outnumbered advancers by a 2.81-to-1 ratio on the NYSE and by a 3.03-to-1 ratio on the Nasdaq.
The S&P 500 posted no new 52-week highs and 19 new lows while the Nasdaq Composite recorded 14 new highs and 127 new lows.
