Wall St ticks lower as markets monitor Hormuz situation; data awaited

Wall Street’s main indexes inched lower on Monday after the S&P 500 and the Dow hit record highs last week, as investors weighed Middle East developments and awaited crucial inflation data and earnings.

Iran said it was close to a final agreement with Oman defining new shipping lanes between them, but repeated that the U.S. must meet several conditions before the strategic waterway reopens.

Easing energy flows through the crucial choke point could mitigate concerns over heightened oil prices that have spurred inflation worries and betson interest rate hikes by central banks worldwide.

Consumer and producer inflation readings due later this week could offer key clues on the Federal Reserve’s monetary policy path, given Fed Chair Kevin Warsh’s stance of offering muted forward guidance.

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

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

Rate-hike bets were tempered on Friday after data showed the U.S. economy unexpectedly shed jobs in July. Traders now price in a 44% chance of a rate hike in September, according to the CME FedWatch tool.

In the market, six of the 11 S&P 500 sectors were lower, with real estate and consumer staples stocks the biggest weights.

The S&P 500 information technology index lost 0.4%. Apple declined 2.4% following a stock downgrade by Jefferies, while Intel dropped 4.8% after launching a $15 billion stock offering.

On the flip side, the S&P 500 energy index jumped 2.6%, tracking a 2% gain in oil prices.

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 lost 5.22 points, or 0.07%, to 7,752.42 and the Nasdaq Composite lost 61.56 points, or 0.23%, to 26,629.06.

The benchmark S&P 500 hit a record close on Friday and the blue-chip Dow .DJI touched all-time highs last week, as solid earnings, especially from AI companies, offset some concerns about high spending not yielding enough evidence of paying off.

Against that backdrop, J.P.Morgan raised its year-end target for the benchmark to 8,000 from 7,800.

A total of 85.1% of the 436 companies in the S&P 500 that have reported earnings to date for the June quarter have beaten estimates, more than the 67% seen in a typical quarter since 1994, according to LSEG data.

The earnings calendar thins out this week, with semiconductor company Applied Materials and networking equipment maker Cisco among the few reporting.

Among others, eBay fell 3.9% after Bloomberg News reported that GameStop CEO Ryan Cohen was considering pulling the company’s $56 billion bid.

Comments from Cleveland Fed President Beth Hammack are expected later in the day.

Separately, the U.S. Senate passed a temporary bill to fund federal agencies through December 11 on Saturday, averting a crippling shutdown weeks before the November midterm elections.

Declining issues outnumbered advancers by a 1.5-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.

The S&P 500 posted nine new 52-week highs and no new lows, while the Nasdaq Composite recorded 40 new highs and 23 new lows.