U.S. equities finished mixed on Monday, with the Dow Jones Industrial Average advancing while the S&P 500 and Nasdaq Composite retreated, as weakness in technology and semiconductor shares offset gains in financials. The S&P 500 slipped 0.28% to 7,652.96, and the Nasdaq Composite dropped 0.76% to 25,980.19. In contrast, the Dow rose 139.98 points, or 0.26%, to 53,416.99.
Tech and chip stocks under pressure
Semiconductor names led the decline, with Micron Technology falling more than 5%, while Advanced Micro Devices and Broadcom dropped 3% and 2%, respectively. The iShares Semiconductor ETF lost 2%. Other tech-related stocks also slid: Coherent and Lumentum each fell 4%, SanDisk and Seagate Technology declined 6%, and Corning dropped 3%.
Nvidia also traded lower ahead of its quarterly earnings report, due Wednesday. The results are widely seen as a critical test for investor confidence in AI-related equities and broader market valuations. The company's stock has already slipped in recent sessions, and Nvidia enters earnings week after a five-day slide.
Sentiment was further dampened by political pushback against AI data centers. Texas Governor Greg Abbott ordered a pause on approvals for new data center projects through the state's grid interconnection process, citing concerns over electricity demand and grid reliability.
Financials lift the Dow
Financial stocks provided support to the blue-chip index. JPMorgan Chase and Visa both gained, helping the Dow stay positive despite weakness elsewhere. This divergence highlights the rotation away from high-flying tech names into more value-oriented sectors.
Treasury yields ease ahead of Jackson Hole
Treasury yields moved lower after reports that the U.S. Treasury could use its nearly $1 trillion General Account to help fund a bond buyback operation. The 10-year yield declined more than four basis points to 4.69%, while the 30-year yield fell six basis points to 5.216%. The long-term yield had climbed above 5.3% last week, reaching levels not seen in nearly two decades.
The Treasury had previously announced plans to at least double the pace of government debt buybacks over the coming months. While the measures initially provided some relief to longer-term yields, the impact was limited. Attention now turns to Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium on Friday, where investors will look for clues on interest rates and the Treasury's bond market support efforts.
Inflation data and rate expectations
Markets will also receive the July personal consumption expenditures price index on Wednesday. This is the Fed's preferred inflation gauge and could influence monetary policy expectations. According to LSEG data, traders are pricing in one 25-basis-point rate hike by the end of 2026.
Geopolitical risks and trade tensions
Investor sentiment was also affected by new U.S. economic pressure on Iran. The Trump administration announced a possible expansion of secondary sanctions against countries doing business with Iran, though no penalties were imposed immediately. This development adds to concerns that the U.S.-Iran conflict could persist, potentially keeping oil prices elevated and adding to inflation pressures.
Separately, President Donald Trump said tariffs on cars, trucks, automotive parts, and steel imports from Canada would rise to 50% from January 1, 2027, after trade talks broke down. Ford and General Motors shares declined, while J.B. Hunt Transport also fell sharply. The news also impacted U.S. steel stocks, which rallied as trade talks collapsed.
Looking ahead
With Nvidia earnings and inflation data due this week, investors are watching whether corporate earnings and economic data can offset pressure from technology valuations, geopolitical risks, and uncertainty around interest rates. The market's reaction to these events could set the tone for the remainder of the week.
This article is for informational purposes only and does not constitute financial advice.
