The S&P 500 closed at 7,753.11 Monday, down 4.53 points from the record it set the session before. The Dow Jones Industrial Average lost 60.95 points to finish at 53,975.98, and the Nasdaq fell 85.26 to 26,605.36. The retreat came as oil prices jumped and long-term Treasury yields extended their recent climb, offsetting strength in chipmakers tied to AI spending.
Brent crude settled at $87.72 a barrel, a 5 percent single-session gain. That price matches levels Brent touched in mid-July, mid-June and during the opening week of the conflict in March, according to FactSet data. The price has swung between $72 and $102 over the past month as negotiations between the United States and Iran over Strait of Hormuz access moved through cycles of optimism and breakdown. Monday's move reflected a return to caution after hopes for a deal cooled again.
The Strait of Hormuz is the narrow waterway between Iran and Oman through which roughly 20 percent of global seaborne oil passes. A closure or threat to shipping there forces tankers onto longer routes, tightens supply and pushes crude prices higher. That transmission from the Middle East to U.S. pump prices is the direct link Wall Street is watching.
Higher oil prices feed directly into inflation. The central data point for markets this week arrives Wednesday, when the government releases its July consumer price index reading. Economists project inflation decelerated to 3.4 percent last month from 3.5 percent in June. A number at or below that estimate reduces pressure on the Federal Reserve to raise interest rates further; a surprise to the upside reopens that debate.
With Brent back above $87, any path toward lower rates grows narrower. Higher crude sustains services and transportation costs, two of the stickiest components in the CPI basket.
The earnings backdrop complicated the oil story. S&P 500 companies are on track to report earnings-per-share growth of 50 percent for the second quarter compared with the same period a year ago, according to FactSet. That would be the strongest quarterly profit expansion since the post-COVID rebound five years ago, when companies were recovering from near-zero activity levels. Strong earnings compress valuation multiples by raising the denominator—when profits jump, even elevated stock prices look less stretched.
Berkshire Hathaway added texture to that picture over the weekend. The company reported a stronger-than-expected quarterly profit and disclosed that under new CEO Greg Abel—who succeeded Warren Buffett—it deployed a portion of its large cash reserve into stocks. Berkshire has long resisted buying when it considered markets overpriced, so the move drew attention. The company did not specify which equities it purchased.
Two acquisition deals drove the session's biggest individual stock moves. MarineMax surged 46.1 percent after agreeing to sell itself to a Blackstone portfolio company in an all-cash deal valued at roughly $1.5 billion. Varex Imaging climbed 48.8 percent after Teledyne Technologies announced it would acquire the X-ray imaging component maker at $18.90 per share in cash. Both deals came at premiums large enough to compress any residual short interest in the targets.
Intel moved in the opposite direction, falling 4.1 percent after the company disclosed it is considering selling up to $15 billion in new stock. A share issuance of that size dilutes existing shareholders by increasing the total share count. Intel said it intends to use the proceeds to invest in AI infrastructure, following a broader industry push to build out data-center capacity. The stock's decline reflected the market's immediate reaction to dilution risk, even as Intel framed the raise as growth-oriented.
Chipmakers broadly held up better than the rest of the market, supported by sentiment around AI infrastructure spending and evidence that demand for AI compute remains strong. That sentiment lifted semiconductor names without fully offsetting the drag from rising yields and oil.
With the S&P 500 at 7,753, the Dow at 53,975 and the Nasdaq at 26,605 as of Monday's close, a market that has run hard on earnings momentum is now contending with two cost-push forces: energy prices and the rate path. The 50 percent earnings growth rate is a high base to sustain. If Wednesday's CPI print comes in above the 3.4 percent forecast, the Fed's next move becomes a live question again, and the valuation cushion that strong profits have provided loses some of its depth.
