Wall Street slips as Iran tensions, oil gains offset AI optimism

US stocks closed lower on Monday, August 17, as rising oil prices and US-Iran tensions weighed on sentiment, offsetting a boost from AI-related tech stocks. The Dow fell 0.51%, the S&P 500 lost 0.52%, and the Nasdaq slipped 0.31%, with the energy sector the only gainer. Investors are now focused on retail earnings from Home Depot and Walmart for clues on consumer spending, while Anthropic's strong revenue outlook and a chip rally provided some support.

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Wall Street closes lower as Iran tensions and rising oil prices weigh All three major US indexes finished down on Monday, with the Dow falling 272.63 points (0.51%) to 53,459.78, the S&P 500 losing 0.52% to 7,745.06, and the Nasdaq dropping 0.31% to 26,644.91. Oil futures settled up more than $2 a barrel as diplomatic efforts between the US and Iran appeared stalled, providing support for the energy sector, the only gainer among the S&P 500's 11 major industry groups. 1 2 3 4

Investors await retail earnings from Home Depot and Walmart for consumer clues With July's weak retail sales and jobs data fresh in mind, investors are cautious ahead of quarterly results from major retailers. Home Depot reports on Tuesday and Walmart on Thursday, with analysts expecting subdued results, particularly for Lowe's, which has been pressured by weak demand. The reports are seen as key indicators of consumer spending health. 1 2 5 6

Anthropic's $65 billion revenue run rate fuels AI stock optimism Anthropic told investors its annualized revenue run rate hit $65 billion at the end of July, a sevenfold increase from a year ago, ahead of its anticipated IPO. The news, along with a forecast of $190-$200 billion in 2028 revenue, helped lift sentiment toward tech stocks, though gains in chips were offset by declines in software shares. 7 8 9

Chip stocks rally on AI memory demand and Commerce Secretary's China comments SanDisk surged 10% and Micron jumped 6% amid a bullish note from Bank of America and comments from Commerce Secretary Howard Lutnick that the administration is 'not in favor' of Apple sourcing DRAM and NAND from Chinese suppliers. The PHLX semiconductor index rallied 1.6%, while the Roundhill Memory ETF was up 7%. 9 10

Treasury yields climb to multi-year highs as rate-hike bets fade The 10-year Treasury yield pushed back above 4.71%, near a 19-month high, while the 30-year climbed to 5.29%, a fresh 19-year peak. Fed Chair Kevin Warsh's suggestion that a hike may not be his preferred tool against higher prices has taken the sting out of front-end pricing, with the dollar softening ahead of Wednesday's FOMC minutes. 10 11