US stocks: US market retreats from record highs as Hormuz, inflation data loom

US stocks edged lower on Monday, retreating from last week’s record highs as investors monitored developments in the Middle East and looked ahead to key inflation data and corporate earnings, Reuters reported.

At 9:35 a.m. ET, the Dow Jones Industrial Average fell 72.88 points, or 0.13%, to 53,964.05. The S&P 500 declined 5.22 points, or 0.07%, to 7,752.42, while the Nasdaq Composite dropped 61.56 points, or 0.23%, to 26,629.06.

Iran said it was nearing an agreement with Oman on new shipping lanes but reiterated that the US must meet several conditions before the Strait of Hormuz can reopen. Restoring energy flows through the key waterway could ease concerns over elevated oil prices and inflation, reducing pressure on central banks to raise interest rates.


Consumer and producer inflation data due later this week could offer crucial clues about the Federal Reserve’s next policy moves, as Chair Kevin Warsh continues to provide limited forward guidance.

“The prevailing narrative is that inflation remains ... high, but is not that far from the Fed’s 2% goal,” Bob Edwards, chief investment officer at Edwards Asset Management, told Reuters.

“A benign CPI report and no September rate hike would give this market permission to run faster.”

Expectations of a September rate hike eased on Friday after data showed the US economy unexpectedly lost jobs in July. Traders now see a 44% probability of an increase, according to CME’s FedWatch tool.

Six of the S&P 500’s 11 sectors traded lower, with real estate and consumer staples among the biggest drags. The information technology sector declined 0.4% as Apple fell 2.4% following a Jefferies downgrade and Intel slid 4.8% after announcing a $15 billion share offering.

Energy bucked the broader weakness, climbing 2.6% as oil prices rose about 2%.

Strong results, particularly from AI-linked companies, pushed the S&P 500 to a record close on Friday and the Dow to all-time highs last week, easing concerns about returns on heavy AI spending.

JPMorgan raised its year-end S&P 500 target to 8,000 from 7,800. About 85.1% of the 436 index companies that have reported June-quarter results beat estimates, well above the historical average of 67%, according to LSEG.

The earnings calendar is lighter this week, with Applied Materials and Cisco among the major companies due to report.

Among individual stocks, eBay fell 3.9% after Bloomberg reported that GameStop CEO Ryan Cohen was considering withdrawing the company’s $56 billion bid. Investors also awaited comments from Cleveland Fed President Beth Hammack.

Separately, the US Senate approved temporary funding for federal agencies through December 11, averting a shutdown ahead of the November midterm elections.

Decliners outnumbered advancers by 1.5 to 1 on the NYSE and 1.26 to 1 on the Nasdaq. The S&P 500 recorded nine new 52-week highs and no new lows, while the Nasdaq posted 40 new highs and 23 new lows.