S&P 500 ends lower, Apple dips ahead of quarterly report

The S&P 500 closed lower on Monday after oil prices fell due to optimism surrounding a potential US-Iran peace deal, while Apple shares slipped before the release of its quarterly report. Investors were also awaiting results from the upcoming US midterm elections scheduled for Tuesday. Longer-term US Treasury yields dipped, and Brent crude prices declined as Iran signaled its willingness to engage in peace talks after eight months of conflict in the Middle East, which had contributed to high energy prices and inflation.

Apple's stock fell by 1.5% prior to its quarterly report; however, the company's earnings exceeded expectations after the closing bell, driven by early demand for its iPhone 18 Pro lineup and price increases that helped offset higher memory-chip costs. Consequently, Apple's shares were nearly flat after the report.

Other notable movements included a 2.2% gain for Amazon and a 1% increase for Tesla. The Dow Jones Industrial Average finished higher on Monday, while the S&P 500 and Nasdaq both gained on the first day of trading in November. In October, the Nasdaq experienced a 5.3% monthly decline following a sell-off on Friday due to concerns about excessive AI infrastructure spending.

Jake Dollarhide, CEO of Longbow Asset Management, cautioned that investors remain cautious about the pace of AI investments, emphasizing that companies must recognize a limit to their spending and its impact on shareholder value.

The S&P 500 declined by 0.51% to close at 7,541.40 points, while the Nasdaq dropped 1.07% to 25,164.32 points, and the Dow Jones Industrial Average rose by 0.41% to 51,983.98 points. Seven of the eleven S&P 500 sector indexes rose, led by consumer discretionary, which gained 2.25%, followed by a 1.83% increase in materials. The energy index dropped 4%. Trading volume on US exchanges was relatively high, with 18.8 billion shares traded, compared to an average of 17.3 billion shares over the previous 20 sessions.

Stocks in the AI sector faced uncertainty after Anthropic, an AI company, reported a sharp narrowing of its net loss and a significant revenue jump ahead of a potential listing. Meanwhile, Marvell Technology saw a 13% decline after announcing a US$115 billion all-stock acquisition of optical components maker Lumentum. Intel experienced an 8.8% drop, adding to a 29% decrease on Friday after the company announced quarterly revenue below market estimates and a lack of positive cash flow expectations for the year.

Palantir fell 3.1% before its quarterly report, and AMD dropped 7.5% before its quarterly earnings report on Tuesday.

S&P 500 third-quarter earnings are projected to rise over 30% year-over-year, with AI-related companies contributing significantly to the growth, according to LSEG data. The S&P 500 is currently valued at approximately 19 times expected earnings, its lowest valuation since 2023. Investors were also closely watching the US midterm elections on Tuesday, which could potentially shift control of Congress away from President Donald Trump's Republican Party.

Polls indicated that Democrats were likely to gain control of the House of Representatives; however, the outcome in the Senate remained uncertain. During the previous two years of Trump's administration, Republicans had controlled both chambers of Congress. Data showed that US manufacturing activity increased in October due to solid domestic demand, with advancing issues outnumbering falling ones by a ratio of 2.2-to-1 within the S&P 500.

The S&P 500 had 35 new highs and one new low, while the Nasdaq recorded 112 new highs and 323 new lows.