Wall Street closed lower on Monday, dragged down by retail and communications stocks. Concerns around overvaluation of AI-related stocks and rising oil prices because of continued Middle East tensions weighed on investor mood. All three benchmark indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 272.63 points, or 0.5%, to close at 53,459.78. Twenty-four components of the 30-stock index ended in the negative territory, while six ended in the positive.
The tech-heavy Nasdaq Composite fell 84.25 points, or 0.3%, to close at 26,644.91.
The S&P 500 slid 40.7 points, or 0.5%, to close at 7,745.06. Ten of the 11 broad sectors of the benchmark index closed in the red. The Communication Services Select Sector SPDR (XLC), the Consumer Staples Select Sector SPDR (XLP) and the Financials Select Sector SPDR (XLF) declined 1.5%, 1.5% and 1%, respectively, while the Energy Select Sector SPDR (XLE) advanced 0.9%.
The fear gauge CBOE Volatility Index (VIX) increased 6.6% to 15.19. A total of 14.74 billion shares were traded on Monday, lower than the last 20-session average of 16.95 billion. Decliners outnumbered advancers by a 1.76-to-1 ratio on the NYSE and by a 1.68-to-1 ratio on the Nasdaq.
Oil Prices Rise on Iran War Supply Fears
Oil prices settled more than $2 higher on Monday as investor pessimism over diplomatic efforts to resolve the Iran war fueled concerns about global supplies. Brent crude rose $2.35, or 2.7%, to $90.87 a barrel, while WTI crude gained $2.10, or 2.6%, to $84.50.
President Donald Trump demanded Iran’s surrender and threatened military action, including bombing Oman if it interferes. Tehran, meanwhile, warned it could escalate tensions in and beyond the Strait of Hormuz if Washington fails to fully implement an interim peace deal.
Consequently, Devon Energy Corporation DVN and Valero Energy Corporation VLO gained 3.8% and 1.6%, respectively. While DVN currently carries a Zacks Rank #3 (Hold), VLO sports a #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Consumer Spending Concerns Weigh on Wall Street Sentiment
Concerns about weakening U.S. consumer spending weighed on investor sentiment on Monday. July retail sales had unexpectedly come in 0.6% lower late last week, raising fears that economic momentum could be losing steam. The decline was the weakest reading since May 2025 and came as higher energy costs put additional pressure on household budgets.
Investors also awaited earnings from major retailers, including Home Depot, Walmart and Target, for clues about consumer resilience. The reports were viewed as an important test of whether the weak retail-sales data represented a temporary slowdown or a broader pullback in spending.
Treasury Yields Rise as Oil Fuels Inflation Concerns
U.S. Treasury yields rose on Monday as a surge in oil prices heightened concerns over inflation. The 10-year yield climbed to around 4.72%, while the 30-year yield jumped to 5.31%, its highest level since 2007.
Rising yields came despite weaker retail sales and reduced expectations for near-term Fed rate hikes, with investors increasingly focused on fiscal concerns and the inflationary impact of the Iran conflict and higher energy costs.
No economic data was released on Monday.
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