The S&P 500 slipped Monday after the U.S. and Iran exchanged strikes for the first time since July, sending oil prices more than 2% higher. The pullback came even as Wall Street stayed on track for its fifth straight winning month, led by gains in Nvidia, Microsoft and Micron.
S&P 500 falls as fighting resumes
The S&P 500 slipped 0.4% on Monday, while the Nasdaq Composite declined 0.3%. The Dow Jones Industrial Average traded 328 points, or 0.6%, lower, dragged down by losses in Goldman Sachs and Alphabet.
The selling followed a fresh exchange of fire between the U.S. and Iran. On Sunday, U.S. Central Command confirmed that American forces struck two rocket launchers on Iran's Larak Island, the first publicly acknowledged U.S. strike inside Iran since late July.
Iranian state media reported that Tehran retaliated by attacking U.S. bases in Jordan. President Donald Trump warned of further action, telling Fox News: "We're going to hit them hard."
Oil jumps, yields climb
U.S. West Texas Intermediate crude traded more than 2% higher, above $85 a barrel. Brent crude futures rose more than 2%, above $90 a barrel. Longer-dated Treasury yields rose alongside oil, adding to the downbeat mood in equities.
Tom Hainlin of U.S. Bank Asset Management said oil's current levels are a little high but not yet damaging to the economy. He added that a climb past $100 a barrel would start to get more restrictive. Elsewhere, Aon agreed to buy USI Insurance Services from KKR for $17 billion, a deal that triggered a sell signal on Aon's stock even as KKR shares advanced.
Wall Street still on pace for monthly gains
Despite Monday's losses, the Dow is up more than 1% month to date, putting it on track for a fifth consecutive monthly advance. The S&P 500 and Nasdaq were headed for their first one-month gains since May, up about 2% and 3%, respectively.
Both the S&P 500 and Dow reached all-time highs earlier in August. Tech stocks led the advance this month.
The S&P 500 tech sector is up nearly 6% for August. Nvidia climbed more than 9%, while Microsoft and Micron Technology advanced 10% and 15%, respectively. Investors now turn to Friday's August jobs report for more clarity on the economy's path.
Sources: CNBC, Investor's Business Daily
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