Stock Indices Finish Mostly Lower on Chipmaker Weakness

The S&P 500 Index ($SPX) (SPY) closed down by -0.28% on Monday, the Dow Jones Industrial Average ($DOWI) (DIA) closed up by +0.26%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down by -0.97%.  E-mini S&P futures (ESU26) fell -0.27%, and September E-mini Nasdaq futures (NQU26) fell -0.95%.

Stock indices settled mostly lower on Monday, with the S&P 500 falling to a 2.5-week low and the Nasdaq 100 falling to a 3-week low.  The broader market was under pressure on Monday amid the weakness in chipmakers and AI-infrastructure stocks.  Also, weighing on market sentiment was the collapse of trade talks late last Friday between Canada and the US, prompting the US to apply a 50% tariff on about $20 billion of Canadian goods.  Canada announced retaliation on US goods that will take effect on September 8.

Stock losses were limited on Monday as crude oil prices fell more than -2%, pushing inflation expectations and bond yields lower.  The 10-year T-note yield fell -3 bp to 4.70%. 

Monday’s US economic news showed the July Chicago Fed national activity index fell -0.14 to -0.08, slightly stronger than expectations of -0.09.

US Treasury Secretary Scott Bessent said Monday that the US announced a campaign to sever Iran from the global economy, warning that any country doing business with Iran risks facing US sanctions.  He said the US is focusing on five of Iran's "most vital lifelines," including digital assets, technology, gold, aviation, and shipping, and that countries will have a defined timeline to shut down economic cooperation with Iran; if they don't, the Treasury will act unilaterally. 

Iran's secretary of the Supreme National Security Council said, "Iran will regard any country's participation in or support for America's economic war against the Iranian people as an act of war and not a single drop of oil will be exported, neither through the Strait of Hormuz nor from anywhere in the Persian Gulf."

Oct WTI crude oil prices (CLV26) fell more than -2% on Monday after Axios reported that about 40 tankers transited out of the Strait of Hormuz last Friday night, transporting around 16 million bbl of crude.  Also, the Joint Maritime Information Center cut the threat level for shipping in the Gulf of Oman to “moderate,” one step lower than the previous assessment.  The moderate assessment means the threat of attack on shipping off the coast of Oman is possible but not likely. 

President Trump has said that the US naval blockade on Iranian ports is putting pressure on the country, and he has no timeline for resolving the US-Iran conflict.  Also, US Energy Secretary Chris Wright said that the US is playing the long game with Iran, implying the US has no plans to de-escalate the conflict, potentially limiting crude supplied from the Middle East.

The outlook for strong Q2 earnings is a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.  AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2.  So far, earnings results have been positive, with 86% of the 468 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data. 

The markets are discounting a 43% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.

Overseas stock markets settled lower on Monday.  The Euro Stoxx 50 closed down -0.22%.  China's Shanghai Composite fell to a 2.5-week low and closed down -0.59%.  Japan's Nikkei-225 Stock Average closed down -0.74%.

Interest Rates

September 10-year T-notes (ZNU6) closed up by +6 ticks on Monday.  The 10-year T-note yield fell -3.8 bp to 4.696%.  T-notes rose on Monday amid weakness in crude oil prices, which weakened inflation expectations.  T-notes also have safe-haven support from today’s stock market weakness.  T-notes added to their gains Monday on a report from CNBC that said the Treasury could use the Treasury General Account, which had a balance of $935 billion on August 20, to fund expanded buybacks of higher-yielding, older government securities.   

Supply pressures limited the upside in T-note prices on Monday as the Treasury will auction $211 billion of T-notes and floating rate notes this week, beginning with Tuesday’s $69 billion auction of 2-year T-notes.  

European government bond yields moved lower on Monday.  The 10-year German bund yield fell -0.6 bp to 3.253%.  The 10-year UK gilt yield fell -0.3 bp to 5.057%.

ECB Executive Board member Piero Cipollone said, "In the event of a supply-side shock, such as the oil shock, hiking interest rates so as to stabilize inflation around the target could dampen economic growth that is already affected by a negative shock."

Markets are discounting a 95% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.

US Stock Movers

Chipmakers and AI-infrastructure stocks were under pressure on Monday, weighing on the broader market.  Sandisk (SNDK) closed down more than -6% to lead losers in the S&P 500 and Nasdaq 100, and Seagate Technology Holdings Plc (STX) also closed down more than -6%.  Also,    Western Digital (WDC) and Micron Technology (MU) closed down more than -5%, and Advanced Micro Devices (AMD), Intel (INTC), and Marvell Technology (MRVL) closed down more than -3%.  In addition, Nvidia (NVDA) closed down more than -2% to lead losers in the Dow Jones Industrials, and Microchip Technology (MCHP), Broadcom (AVGO), and Texas Instruments (TXN) closed down more than -2%. 

Energy producers and service providers slid on Monday after WTI crude oil fell more than -2%.  Diamondback Energy (FANG) and Halliburton (HAL) closed down more than -2%, and APA Corp (APA), ConocoPhillips (COP), Occidental Petroleum (OXY), Chevron (CVX), and Devon Energy (DVN) closed down more than -1%.

Trucking and freight companies fell on Monday after the US announced new 50% tariffs on hundreds of Canadian products and Canada pledged to retaliate. JB Hunt Transport Services (JBHT) closed down more than -5%, and FedEx Freight Holding (FDXF) and ArcBest (ARCB), closed down more than -4%.  Also, Knight-Swift Transportation Holdings (KNX) and Saia Inc (SAIA) closed down more than -3%, and Old Dominion Freight Line (ODFL) and XPO Inc (XPO) closed down more than -2%.  In addition, Marten Transport Ltd (MRTN) closed down more than -1%. 

Regenxbio (RGNX) closed down more than -24% after the FDA placed a clinical hold on its investigational gene therapy RGX-121 for Hunter Syndrome, citing the discovery of either small nodules or a cystic mass in spine MRIs of five trial participants. 

Applied Optoelectronics (AAOI) closed down more than -13% after announcing that it filed for a possible offering of $600 million in shares of common stock.   

Expedia Group (EXPE) closed up more than +5% on Monday to lead gainers in the S&P 500 after Evercore ISI boosted its price target on the stock to $430 from $375.

Mastercard (MA) closed up more than +3%, and Visa (V) closed up more than +3% to lead gainers in the Dow Jones Industrials after CNBC reported that President Trump in June reshuffled his portfolio in June and bought shares of the companies. 

Darden Restaurants (DRI) closed up more than +2% after Baird upgraded the stock to outperform from neutral with a price target of $250. 

Earnings Reports (8/25/2026)

Dick's Sporting Goods Inc (DKS), HEICO Corp (HEI), Intuit Inc (INTU), Semtech Corp (SMTC), Zoom Communications Inc (ZM).