Stock Indices Finish Mostly Lower on Chipmaker Weakness

On Monday, stock indices closed mostly lower, led by weakness in chipmakers and AI infrastructure stocks. The S&P 500 Index closed down by -0.28%, the Dow Jones Industrial Average closed up by +0.26%, and the Nasdaq 100 Index closed down by -0.97%. E-mini S&P futures fell by -0.27%, while September E-mini Nasdaq futures fell by -0.95%.

The broader market was under pressure due to the collapse of trade talks between Canada and the US, which prompted the US to impose a 50% tariff on about $20 billion of Canadian goods. Canada retaliated with tariffs on US goods set to take effect on September 8. Meanwhile, IonQ and Rigetti were seen as better quantum computing stocks for long-term investors.

Nvidia's earnings and Federal Reserve Chair Jerome Powell's Jackson Hole speech were awaited for market insight. Stock losses were limited as crude oil prices fell more than -2%, reducing inflation expectations and bond yields. The 10-year Treasury yield dropped by -3 basis points to 4.70%. US Treasury Secretary Scott Bessent announced a campaign to sever Iran from the global economy, warning that countries doing business with Iran risk facing US sanctions.

Iran's Supreme National Security Council threatened that no oil will be exported if the US does not stop its economic war on Iran. Market sentiment was further weighed down by a moderate threat level for shipping in the Gulf of Oman and the US' long-term strategy towards Iran. Despite strong Q2 earnings outlook, markets are discounting a 95% chance of a +25 basis point rate hike at the next Federal Open Market Committee meeting on September 15-16.