U.S. stocks traded mixed on Monday after giving up part of their opening gains. Investors shifted their attention toward a busy week of corporate earnings, which could provide the next major catalyst for Wall Street.
Rising tensions in the Middle East also remained in focus. Meanwhile, the economic calendar was relatively quiet, and Federal Reserve officials had entered their communications blackout period.
S&P 500 and Nasdaq Rise as Dow Slips
At 10:37 ET, the S&P 500 was up 0.3% at 7,476.61 points.
The technology-heavy Nasdaq Composite gained 0.6% to reach 25,659.10 points.
However, the Dow Jones Industrial Average reversed its earlier advance. The blue-chip index was last down 0.4% at 51,955.07 points.
Chip Stock Selloff Pressures Wall Street
Major U.S. stock indices recorded losses during the previous week.
A sharp decline in semiconductor stocks pushed the Philadelphia Semiconductor Index into bear market territory.
For the week, the Nasdaq fell 2.9%, while the S&P 500 dropped 1.6%. The Dow Jones declined by 0.9%.
Deutsche Bank analysts warned that unresolved risks could become more disruptive during periods of thin summer trading.
AI Spending Concerns Weigh on Technology Stocks
Questions surrounding the artificial intelligence boom have also increased.
AI-related companies have driven a large share of the stock market’s gains this year. However, investors are beginning to question whether the current surge in spending can continue.
Some active fund managers have reportedly reduced their exposure to artificial intelligence stocks.
Concerns focus mainly on whether companies can generate sufficient returns from the billions being invested in AI infrastructure, data centres and advanced chips.
U.S.-Iran Conflict Keeps Investors Cautious
Investor sentiment remained fragile as the United States launched a ninth consecutive day of strikes against Iran.
Iran responded with attacks targeting infrastructure and military sites across the Gulf region.
Tensions also increased around the Strait of Hormuz. Iran said it had intercepted vessels attempting to pass through the strategically important waterway.
The conflict has raised concerns about global energy supplies and the risk of higher inflation.
Diplomatic Hopes Remain
Despite the military escalation, there were still signs that negotiations could resume.
U.S. Secretary of State Marco Rubio said Washington remained open to talks with Iran. He added that the United States would welcome another opportunity for negotiations.
Iran has also suggested that discussions could take place if they support the country’s national interests.
Iranian Foreign Minister Abbas Araghchi said talks could begin after certain strategic objectives had been achieved.
Iran’s Foreign Ministry also said mediators had presented proposals aimed at preventing further escalation.
Oil Prices Complicate Federal Reserve Outlook
Brent crude futures eased after briefly rising above $90 per barrel earlier on Monday.
U.S. West Texas Intermediate crude remained above $84 per barrel after recording strong gains during the previous week.
Higher energy prices could complicate the Federal Reserve’s inflation outlook.
Recent economic data had suggested that inflation may be cooling. However, a prolonged rise in oil prices could slow further progress and reduce the likelihood of interest rate cuts.
As a result, traders are reassessing their expectations for monetary easing later this year.
Alphabet, Tesla and Intel Earnings in Focus
Investors are now preparing for a busy week of second-quarter earnings reports.
Alphabet, the parent company of Google, and electric vehicle maker Tesla are among the major companies scheduled to release results.
General Motors is also due to report, providing investors with a closer look at consumer demand and conditions in the automotive industry.
Chipmakers Intel and Texas Instruments will also publish earnings.
Their results could offer new insight into semiconductor demand and the scale of infrastructure investment required to support artificial intelligence growth.
