U.S. stocks drop amid mixed signals on Middle East war
Technology stocks were among the day’s biggest drags on the S&P 500, with a semiconductor index dropping 4.2%
Major U.S. stock indexes mostly dropped on Monday as U.S. President Donald Trump’s new warning to Iran and a widening of the Middle East war offset optimism over his comments on U.S. discussions with Iran.
Investors have been rattled by uncertainties surrounding the Middle East war, which has caused oil prices to spike and has fanned inflation fears.
The administration continues to send mixed messages, said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
When the messages seem good, to the extent they are believed, it helps the market. If something they say implies a more aggressive approach, the market sells off, he said.
Meckler said investors may be looking for a technical “bottom” after recent selloffs.
The local stock indexes started the day higher after logging sharp declines in the previous session. Since the war started, the Dow, the Nasdaq and the small-cap Russell 2000 have all confirmed correction territory, ending 10% lower from their record-high closes.
Technology stocks were among the day’s biggest drags on the S&P 500, with a semiconductor index dropping 4.2%.
The Dow Jones Industrial Average added 49.50 points, or 0.11%, to 45,216.14, the S&P 500 shed 25.13 points, or 0.39%, to 6,343.72 and the Nasdaq Composite declined 153.72 points, or 0.73%, to 20,794.64.
Comments from U.S. central bank Chair Jerome Powell gave some support to stocks. Powell said longer-term inflation expectations appear to be holding despite the current energy shock, and the bank does not yet need to make a decision on how to react to the latest troubles.
Money market participants have priced out any easing from the central bank this year, compared with two cuts expected before the war began, per the CME Group’s FedWatch Tool.
The S&P 500 energy index ended down 0.9% even as oil prices settled higher on the day. Brent crude is on track for a record monthly rise and U.S. crude settled above $100 a barrel for the first time since 2022.
On the flip side, the financial index rose 1.1% after the U.S. Department of Labor issued long-awaited guidelines intended to clarify how trustees can add alternative assets to 401(k) retirement plans.