Stocks fell for a second straight session Monday after the truce document between the United States and Iran ran out of time, sending oil sharply higher and pushing long-term borrowing costs to levels not seen in nearly two decades. When crude rises, so does the cost of shipping, manufacturing and filling a gas tank — and investors sold shares rather than hold them through another leg of the war.

The S&P 500 finished 0.52% lower at 7,745.06, while the Nasdaq Composite declined 0.32% to settle at 26,644.91. The Dow Jones Industrial Average lost 272.63 points, or 0.51%, and closed at 53,459.78. The Russell 2000 fell 0.51%.

The trigger was the calendar. Stocks tipped lower in afternoon trading as oil prices rose on concerns about an escalation in the US-Iran war after a memorandum of understanding between the two nations expired on Monday. Brent crude futures, the international benchmark, hit $90 per barrel after President Trump said he doesn’t see the war ending anytime soon. Trump also threatened Oman, telling Fox News that if the country interferes with the Strait of Hormuz there would be consequences. A senior Iranian official told Reuters on Monday that the country may shift to an offensive policy rather than defensive one, if diplomacy efforts with the U.S. fail.

Energy markets responded immediately. U.S. West Texas Intermediate futures rose 2.6% to $84.50 per barrel, while international benchmark Brent crude futures were higher by 2.7% at $90.87 a barrel. For American drivers, that is the number that eventually shows up at the pump, and it is moving in the wrong direction heading into the back half of summer.

The bond market took the harder hit. The 30-year Treasury yield hit its highest level since June 2007 as oil prices advanced. Long-term yields set what Americans pay on mortgages and what companies pay to borrow, so a 30-year at levels last seen before the financial crisis makes every long-dated loan more expensive. Traders had gone into the session expecting the opposite: the yield on the 2-year Treasury note, which typically reacts in line with short-term Federal Reserve interest rate decisions, dropped more than 1 basis point to 4.1542%. The 30-year Treasury yield, which is typically sensitive to geopolitical events, was more than 2 basis points lower at 5.2445% in early trading before the reversal.

Not everything fell. Micron Technology was a bright spot in the session, however, as shares gained 4%. Chipmakers rallied as Anthropic PBC’s revenue surge bolstered bets on the artificial-intelligence trade after Bloomberg News also reported that Anthropic’s second-quarter revenue was more than $11.5 billion — a massive jump from a year earlier. On the other side, Nike shares are trading at lows not seen since September 2014, as the sports apparel stock continues to falter under pressure.

Step back from the day and the month still looks positive. The major averages are higher across the board so far in August. The Dow is on track for its fifth straight positive month, while the S&P 500 and Nasdaq Composite are on pace for their first positive month in three. Six of the 11 S&P 500 sectors are higher month to date. Tech is leading with a gain of more than 7%, while communication services is lagging. That works out to a bit better than one sector in two moving higher this month.

Last week set the table. For the week ended Aug. 14, the S&P 500 gained 0.4%, while the Nasdaq Composite advanced 0.1%, marking their third consecutive weekly gains. The Dow Jones Industrial Average, however, fell 0.6%, snapping a two-week winning streak. The soft spot was the American shopper: retail sales for July decreased 0.6% against expectations of a small gain, and preliminary consumer sentiment for August fell to 51 after increasing to 55.2 in July.

That makes this week’s calendar unusually consequential. Walmart, Home Depot and Target are among the retailers scheduled to report quarterly results this week — the clearest read available on whether households are actually pulling back. The Federal Reserve posts its latest meeting minutes Wednesday. Three members dissented in favor of a hike at the last meeting, and with oil climbing again, those minutes will tell investors how seriously the central bank is weighing another increase rather than a cut.

JBizNews Desk | Wall Street

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