S&P 500 inches lower as Middle East tensions outweigh tech gains

The S&P 500 experienced a slight decline on Monday, as geopolitical tensions between the United States and Iran overshadowed positive news from the technology sector. The index dropped by 0.14% to 7,775.01, while the Dow Jones Industrial Average was down 0.31% to 53,567.95, and the Nasdaq Composite sank 0.01% to 26,726.73. Iran's senior officials warned of escalating tensions in the Strait of Hormuz and the broader region if diplomatic efforts with the US fail, signaling a shift from defensive to offensive policies.

Brent crude futures saw a modest increase of 0.4%, with the energy index of the S&P 500 gaining 0.2%. Amidst the market volatility, AI lab Anthropic, preparing for its IPO, reported strong revenue forecasts, ranging from $190 billion to $200 billion for 2028. Chipmakers, such as Micron Technology and Sandisk, saw gains of 4.5% and 6.7%, respectively, contributing to limited declines in technology stocks and keeping the tech-heavy Nasdaq flat.

Analysts noted that the broader market will closely monitor Nvidia's performance next week, as the company is the most valuable globally. In other sectors, UnitedHealth and McDonald's weighed on the Dow Jones. While recent concerns over AI investments had battered chip stocks, robust quarterly results and optimistic forecasts for demand had propelled the tech-heavy Nasdaq closer to record highs.

The S&P 500 had closed at a record peak earlier that day after soft inflation data prompted traders to reduce the likelihood of an interest rate hike by the Federal Reserve at its upcoming meeting.