Sliding shares of chip makers and signs of intensifying geopolitical tension weighed on major stock indexes Monday, delivering a muted start to a jam-packed week for markets.
Stocks tied to the artificial-intelligence trade dropped, extending their bumpy stretch ahead of Wednesday's all-important earnings update from Nvidia. Chip, memory and other infrastructure names were among the biggest losers in the S&P 500 index. Shares of Sandisk slid 6.5%. Ciena, another AI infrastructure play, fell 6%.
Nvidia retreated 2.9%. It was the seventh-straight day of declines, the stock's longest losing streak in four years. The $5 trillion chip maker is expected to report record sales of $92 billion for the quarter.
The S&P 500 fell 0.3%, and the Nasdaq composite declined 0.8%. The Dow Jones Industrial Average edged 0.3% higher, rising 140 points.
The week began with strong U.S. rhetoric on two fronts: the continuing war with Iran, and a continuing trade war with Canada.
Treasury Secretary Scott Bessent outlined plans Monday to inflict an "economic D-Day" on Iran. Bessent said the U.S. was sanctioning more than 60 entities, individuals and vessels across the world that enable the regime to procure nuclear and missile technology, collect oil revenue and carry out cyber operations.
The secretary didn't outline any specific steps the U.S. would take against individual countries. Stocks and oil prices were more or less unchanged after Bessent left the stage. Brent crude futures finished 2.35% lower.
"The actual announcement came across as much less dramatic than anticipated, with a wide gap between the rhetoric and the substance," Jorge León, head of geopolitical analysis at Rystad Energy, wrote in a note. "What we have seen so far looks much more like an expansion of the existing sanctions regime than a fundamentally new economic weapon."
Trade tensions between the U.S. and Canada were still running high, with President Trump saying the U.S. would impose 50% tariffs on automobiles and parts from Canada starting in January. Over the weekend, Canadian Prime Minister Mark Carney said his government would respond to a separate set of Trump's tariffs with levies on U.S. goods.
Traders largely shrugged off each of those headlines. "These grand assertions that the Trump administration makes-they get reversed very quickly," said Mike O'Rourke, chief market strategist at JonesTrading. "From a markets perspective, they tend to get ignored."
Bonds, meanwhile, rallied a little amid continued fallout from the Treasury Department's surprise announcement last week that it would at least double the size of longer-term bond buybacks.
Treasury yields, which move in the opposite direction of bond prices, initially fell after the Treasury Department's announcement last Wednesday, before moving higher later in the week.
On Thursday, Bessent said that he was increasing buybacks because current yields didn't reflect the economy's fundamentals.
Many investors remain skeptical that buybacks alone are enough to sustainably push down yields. And by Monday, rumors swept through Wall Street on what other steps the government could take. Some analysts speculated the Treasury Department might reduce the size of longer-term debt auctions, a move that might have a larger impact on yields.
Asked about that possibility on Monday, Bessent declined to say. The Treasury Department, he said, would continue with current auction sizes for now and would make its next announcement about future auctions as scheduled in early November.
Yields ticked higher after that comment but remained lower on the day.
The yield on the 10-year U.S. Treasury note settled at 4.703%, according to Tradeweb, down from 4.737% Friday. The 30-year bond yield slipped to 5.230% from 5.276%.