Wall St retreats after rally as rising US-Iran tensions hurt risk appetite

NEW YORK: Wall Street’s main indexes retreated on Monday, after a stunning rally last week, as renewed US-Iran tensions threatened a collapse of the two-week ceasefire and dented investor sentiment.

Iran is considering attending peace talks with the US in Pakistan, a senior Iranian official told Reuters, following moves by Islamabad to end a US blockade of Iran’s ports. However, a source said Vice President JD Vance was still in the US, denying reports he was on his way to Pakistan for talks.

Iran opened the Strait of Hormuz on Friday, fueling a broad market surge, with the S&P 500 and the Nasdaq posting record highs for a third straight session and marking their biggest weekly gains since May. However, it closed the waterway again over the weekend.

Oil prices jumped 5 percent on Monday, lifting the energy sector on the benchmark S&P 500 up 0.9 percent.

“The market is looking through what they’re seeing in the Middle East conflict. Part of that is because you get a headline one day, you get another the next day,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments.

At 11:41 a.m. ET, the Dow Jones Industrial Average fell 58.18 points, or 0.12 percent, to 49,389.25, the S&P 500 lost 23.56 points, or 0.33 percent, to 7,102.50 and the Nasdaq Composite lost 134.89 points, or 0.55 percent, to 24,333.59.

Tech stocks on the S&P 500 were the biggest weights on the index, with chipmakers at the helm of losses. The Philadelphia SE Semiconductor index lost 0.2 percent.

Countering some losses was a 4 percent gain in Marvell Technology after a report said Alphabet’s Google was in talks with the chipmaker to develop two new chips to run AI models more efficiently.

The S&P 500 consumer discretionary and communication services indexes were the biggest percentage decliners, dragged down by drops of about 1.6 percent and 2 percent in Amazon.com and Meta Platforms, respectively.

Meta is set to snap a nine-session winning streak, its longest since October. Amazon was among the biggest weights to the Dow.

The CBOE Volatility Index, known as Wall Street’s “fear gauge”, gained after falling for the past eight sessions and was last up 1.93 points at 19.42, a one-week high.