Wall Street Tumbles Amid Hormuz Concerns and Inflation Worries

Wall Street's main indexes dipped lower on Monday as investors weighed Middle East developments and awaited crucial inflation data and earnings.

Iran announced it was close to a final agreement with Oman defining new shipping lanes between them, but reiterated that the US must meet several conditions before the strategic waterway reopens. Easing energy flows through the choke point could mitigate concerns over high oil prices, which have fueled inflation worries and bets on interest rate hikes by central banks worldwide.

The S&P 500 information technology index lost 0.4%, while Apple declined 2.4% following a stock downgrade by Jefferies, and Intel dropped 4.8% after launching a $15 billion stock offering.

On the other hand, the S&P 500 energy index jumped 2.6%, tracking a 2% gain in oil prices. The benchmark S&P 500 hit a record close on Friday, while the blue-chip Dow touched all-time highs last week, driven by solid earnings from companies like those in AI.

Bob Edwards, chief investment officer at Edwards Asset Management, said, 'The prevailing narrative is that inflation remains high, but is not that far from the Fed's 2% goal.' A benign CPI report and no September rate hike would give the market permission to run faster, he added. Rate-hike bets were tempered on Friday after data showed the US economy unexpectedly shed jobs in July.