Wall St slips as crude price surge fuels inflation fears, tech bounces back
NEW YORK: Wall Street lost ground on Monday as crude prices touched multiyear highs, giving rise to heightened inflation fears.
All three major U.S. equity indexes tumbled more than 1% in early trading, but pared losses as they struggled to regain their footing in the wake of the previous week's steep losses.
Tech shares rebounded with a boost from microchips , which helped limit the Nasdaq's losses. Oil prices reached their highest levels since mid-2022 due to constricted supply arising from shipping disruptions as the U.S.-Israeli war on Iran entered its tenth day. Ballooning energy prices could metastasize into a broader inflation spike at a time when many U.S. consumers are struggling with affordability. Those mounting worries, combined with Friday's weaker-than-expected employment report, raise the possibility of economic stagflation, which would trap the U.S. Federal Reserve between the two sides of its dual mandate - price stability and full employment. Still, financial markets largely expect the central bank to keep its key interest rate unchanged through the first half of the year, according to CME's FedWatch tool. Hopes of de-escalation of the widening Middle Eastern conflict dimmed after Iran selected Mojtaba Khamenei to succeed his father as supreme leader, a choice U.S. President Donald Trump, who has called for Iran's unconditional surrender, deemed unacceptable.
"There is still an awful lot of uncertainty out there regarding the duration of the (Iran) conflict, as well as the duration of the closure of the Strait of Hormuz," said Sam Stovall, chief investment strategist of CFRA Research in New York. "And again today, seeing such a relative reversal in price movements indicates that investors are looking for any opportunity to jump back in to the equity markets."
Early in the session, the CBOE Market Volatility index , often called the "fear index," touched its highest level since April 2025, the immediate aftermath of Trump's "Liberation Day" tariff shock. The index has since pulled back to Friday's still-elevated level.
The Russell 2000 was off 1.1%, more than 8% below its record closing high reached on January 22. Should the small-cap index dip 10% or more below that January 22 level, that would confirm it has entered into a correction.
Economically sensitive Dow Transports were off 2.0%.
The Dow Jones Industrial Average fell 458.32 points, or 0.96%, to 47,043.77, the S&P 500 lost 37.52 points, or 0.56%, to 6,702.50 and the Nasdaq Composite lost 43.73 points, or 0.20%, to 22,343.72.
Among the 11 major sectors in the S&P 500, only tech stocks were green. Financials and Consumer Discretionary suffered the largest percentage losses.
Homebuilders and banks were down the most, falling by 2.6% and 2.4%, respectively.
The Philadelphia Semiconductor index was a clear outperformer, with chipmakers SanDisk, Broadcom and Nvidia up between 1.2% and 6.6%.
"Investors are taking advantage of a potentially oversold situation in tech," Stovall said.
On the economic front, later this week, the Labor Department's Consumer Price Index, the Commerce Department's second take on fourth-quarter GDP and its broad Personal Consumption Expenditures report all have the potential to move markets.
Declining issues outnumbered advancers by a 3.28-to-1 ratio on the NYSE. There were 91 new highs and 192 new lows on the NYSE.
On the Nasdaq, 1,512 stocks rose and 3,162 fell as declining issues outnumbered advancers by a 2.09-to-1 ratio.
The S&P 500 posted 4 new 52-week highs and 9 new lows while the Nasdaq Composite recorded 41 new highs and 173 new lows.
All three major U.S. equity indexes tumbled more than 1% in early trading, but pared losses as they struggled to regain their footing in the wake of the previous week's steep losses.
Tech shares rebounded with a boost from microchips , which helped limit the Nasdaq's losses. Oil prices reached their highest levels since mid-2022 due to constricted supply arising from shipping disruptions as the U.S.-Israeli war on Iran entered its tenth day. Ballooning energy prices could metastasize into a broader inflation spike at a time when many U.S. consumers are struggling with affordability. Those mounting worries, combined with Friday's weaker-than-expected employment report, raise the possibility of economic stagflation, which would trap the U.S. Federal Reserve between the two sides of its dual mandate - price stability and full employment. Still, financial markets largely expect the central bank to keep its key interest rate unchanged through the first half of the year, according to CME's FedWatch tool. Hopes of de-escalation of the widening Middle Eastern conflict dimmed after Iran selected Mojtaba Khamenei to succeed his father as supreme leader, a choice U.S. President Donald Trump, who has called for Iran's unconditional surrender, deemed unacceptable.
"There is still an awful lot of uncertainty out there regarding the duration of the (Iran) conflict, as well as the duration of the closure of the Strait of Hormuz," said Sam Stovall, chief investment strategist of CFRA Research in New York. "And again today, seeing such a relative reversal in price movements indicates that investors are looking for any opportunity to jump back in to the equity markets."
Early in the session, the CBOE Market Volatility index , often called the "fear index," touched its highest level since April 2025, the immediate aftermath of Trump's "Liberation Day" tariff shock. The index has since pulled back to Friday's still-elevated level.
The Russell 2000 was off 1.1%, more than 8% below its record closing high reached on January 22. Should the small-cap index dip 10% or more below that January 22 level, that would confirm it has entered into a correction.
Economically sensitive Dow Transports were off 2.0%.
The Dow Jones Industrial Average fell 458.32 points, or 0.96%, to 47,043.77, the S&P 500 lost 37.52 points, or 0.56%, to 6,702.50 and the Nasdaq Composite lost 43.73 points, or 0.20%, to 22,343.72.
Among the 11 major sectors in the S&P 500, only tech stocks were green. Financials and Consumer Discretionary suffered the largest percentage losses.
Homebuilders and banks were down the most, falling by 2.6% and 2.4%, respectively.
The Philadelphia Semiconductor index was a clear outperformer, with chipmakers SanDisk, Broadcom and Nvidia up between 1.2% and 6.6%.
"Investors are taking advantage of a potentially oversold situation in tech," Stovall said.
On the economic front, later this week, the Labor Department's Consumer Price Index, the Commerce Department's second take on fourth-quarter GDP and its broad Personal Consumption Expenditures report all have the potential to move markets.
Declining issues outnumbered advancers by a 3.28-to-1 ratio on the NYSE. There were 91 new highs and 192 new lows on the NYSE.
On the Nasdaq, 1,512 stocks rose and 3,162 fell as declining issues outnumbered advancers by a 2.09-to-1 ratio.
The S&P 500 posted 4 new 52-week highs and 9 new lows while the Nasdaq Composite recorded 41 new highs and 173 new lows.
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