Shares rise, dollar slips as markets pare Fed rate risks

U.S. stocks fell on Monday and the dollar hit a two-month low against the euro, as weak U.S. economic data triggered investors to reduce bets on an imminent Federal Reserve interest rate hike. Treasury yields climbed to their highest level since 2007, as fiscal concerns merged with substantial AI-related corporate debt issuance.

Investors were waiting for quarterly reports from major retailers, including Home Depot and Walmart, to gauge the health of the U.S. consumer. Market strategists noted a cautious tone due to summer doldrums and the need for forthcoming economic data. The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all declined slightly.

Uncertainty surrounding the Iran conflict also weighed on stocks. Despite benign inflation data, concerns about the war's impact kept traders from fully committing to the Fed's future actions.