Markets shrug at Trump’s nuclear relief offer to Iran

On Monday, Wall Street's key indices declined as President Donald Trump rejected an Iranian proposal for ending the conflict, causing crude prices to surge and reigniting concerns about inflation. Nvidia experienced a 2.1% increase after announcing a $150 billion share repurchase authorization, but this modest gain could not offset the overall market decline.

Iran proposed a peace plan at the United Nations General Assembly, but President Trump stated he rejected it on Saturday, although he told Axios on Sunday that US negotiators would continue talks that week. Crude prices rose by 3% to approximately $107-a-barrel, negatively impacting Treasury yields, which reached fresh multi-decade highs.

Art Hogan, chief market strategist at B. Riley Wealth, explained that energy consistently fuels inflation, and any additional pressure on prices will likely lead the Federal Reserve to raise interest rates. The Dow Jones Industrial Average dropped 384.11 points, or 0.74%, to 51,446.37, while the S&P 500 fell 64.36 points, or 0.83%, to 7,679.05, and the Nasdaq Composite declined 268.66 points, or 0.99%, to 26,800.06.

Communication Services suffered the largest sectoral losses, with Meta sinking 4.3% following a 13% increase the previous week. Investors found some solace from the trade front after the conclusion of the US-China summit, where the nations agreed to cut tariffs on $60 billion worth of goods imported from each other and extended their trade truce for two months until January 10.

As the week progressed, traders focused on a series of essential economic indicators, with traders pricing a 70% chance that the Federal Reserve would hike interest rates by at least 25 basis points in two consecutive meetings in October, according to the CME Group’s FedWatch Tool. Analysts cautioned that historical instances of the Fed hiking into a supply shock have ended poorly, and the Fed's impatience in raising rates in September could lead to a similar mistake in October.

Investors awaited crucial economic reports, including August’s Personal Consumption Expenditures data on Wednesday and September’s nonfarm payrolls report on Friday, for insights into the Federal Reserve's monetary policy direction. On the NYSE, declining issues outnumbered advancers by a 4.23-to-1 ratio, while on the Nasdaq, the gap widened to 3.15-to-1.

The S&P 500 recorded three new 52-week highs and 26 new lows, whereas the Nasdaq Composite achieved 26 new highs and 197 new lows.