Wall Street Declines Following Previous Rally Amid Heightened US-Iran Tensions

US Stocks Decline Modestly on Monday Amid Renewed Tensions in the Middle East

U.S. stocks declined modestly on Monday, with each of the three major indexes coming off a third straight week of gains, as renewed U.S.-Iran tensions put the durability of a two-week ceasefire in doubt. The Dow Jones Industrial Average fell 96.79 points, or 0.20%, to 49,350.64, the S&P 500 lost 22.61 points, or 0.32%, to 7,103.45, and the Nasdaq Composite lost 99.97 points, or 0.41%, to 24,368.51.

The Strait of Hormuz, a crucial shipping waterway, was closed again over the weekend, fueling a broad market surge earlier in the week. However, the closure of the strait has had a significant impact on the energy sector, with U.S. crude jumping 6.23% to $89.07 a barrel and Brent rising to $95.25 per barrel, up 5.4% on the day. This has lifted the S&P 500 energy index 0.8% as the best-performing of the 11 S&P 500 sectors on the session.

| Sector | Index Performance | | --- | --- | | Energy | 0.8% | | Communication Services | -1.2% | | Consumer Discretionary | -0.7% | | Consumer Staples | -0.6% | | Financials | -0.5% | | Healthcare | -0.4% | | Industrials | -0.3% | | Information Technology | -0.2% | | Materials | -0.2% | | Real Estate | -0.1% | | Utilities | -0.1% |

The communication services sector was the worst-performing sector, with Meta down more than 2% and Netflix down nearly 3%. The CBOE Volatility Index, known as Wall Street's "fear gauge", gained after falling for the past eight sessions and was last up 1.57 points at 19.08.

Investors are waiting to assess the impact of the Iran war on corporate results and on the broader economy, with companies including Lockheed Martin and IBM scheduled to report later this week. Tesla will kick off results from the so-called "Magnificent Seven" cohort on Wednesday. Among the 48 S&P 500 companies that have reported earnings through Friday morning, 87.5% have topped analyst expectations, according to LSEG data. The current first-quarter earnings growth rate stands at 14.4%.

QXO shares slumped 5.1% after the construction supplies distributor struck a $17 billion deal to acquire building products distributor and installer TopBuild, whose shares surged more than 18%. Declining issues outnumbered advancers by a 1.01-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq. The S&P 500 posted 41 new 52-week highs and no new lows while the Nasdaq Composite recorded 164 new highs and 36 new lows.