Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., July 16, 2026.
Brendan McDermid | Reuters
The S&P 500 fell on Monday as oil prices advanced in response to the latest bout of military exchanges between the U.S. and Iran.
The broad market index dropped 0.19% to close at 7,443.28, while the Nasdaq Composite lost 0.05% and ended at 25,508.07. The Dow Jones Industrial Average fell 307.16 points, or 0.59%, to 51,839.26. A more than 2% decline in Apple shares pulled the 30-stock index lower.
The U.S. completed its ninth consecutive day of strikes on Iran overnight, but investor sentiment improved by midmorning in London after Iranian Foreign Ministry spokesman Esmail Baghaei lifted hopes for a diplomatic settlement.
Baghaei told reporters that intermediaries had continued to exchange messages with Iran amid the latest round of U.S. strikes, and said negotiations between the two adversaries could be pursued based on national interests.
That said, oil prices resumed their climb after President Donald Trump said in a Truth Social post that Iran would pay for the deaths of three U.S. service members “many times over!” U.S. crude futures closed 0.9% higher at $83.23 a barrel, while international benchmark Brent settled up about 1.3% at $89.22.
Additionally, Houthis in Yemen announced a maritime embargo on Saudi Arabia.
“Investors still don’t think Trump has the tolerance for a material escalation of the US force posture in the Middle East (i.e. deploying troops) and if that’s the case, then some type of a diplomatic resolution is inevitable,” wrote Adam Crisafulli of Vital Knowledge.
Chipmakers tried to recover some of their steep losses from last week. Micron Technology was a key leader of the advance, climbing almost 2%. Astera Labs gained 1.9%, while Teradyne rose 3.5%. Advanced Micro Devices added 1.6%. The VanEck Semiconductor ETF (SMH) was marginally higher.
“The semiconductor and AI trade is undergoing a healthy reality check,” said Darrell Cronk, president of Wells Fargo Investment Institute and chief investment officer for Wealth and Investment Management. “Recent technical deterioration increases the risk of a deeper pullback toward longer-term support levels, including the 200-day moving averages.”
“While a short-term tactical rebound would not be surprising given oversold conditions, the intermediate-term uptrend has been disrupted,” he added.
The three leading U.S. indexes closed in the red last week, as pressure on chip stocks weighed on sentiment. The SMH saw its third weekly decline in four weeks.