Oil's 5% surge and Nvidia's $500B deal weigh on US stocks

The S&P 500 closed nearly flat and the Nasdaq 100 fell 0.3% as oil's 5% jump on the Hormuz stalemate rekindled inflation fears.

"Negotiation stalls between governments are unsettling Wall Street participants, who last week saw a narrowing path to a deal," said Jose Torres, senior strategist at Interactive Brokers.

Semiconductors led the decline, with ARM down 5.21 percent and Marvell Technology down 4.65 percent, while software and defense shares rose. Microsoft gained 1.21 percent, Amazon added 1.32 percent and Palantir climbed 1.85 percent. Travel and leisure names and homebuilders were the biggest losers as higher oil and rates squeezed rate-sensitive demand. The 10-year Treasury yield rose 6 basis points to 4.70 percent.

The moves leave traders focused on Wednesday's July CPI report, expected to show a 0.1 percent monthly gain, as the key test of whether the Federal Reserve can hold rates steady in September, when markets price about a 54 percent chance of a hike.

Hormuz Stalemate Lifts Oil Past $82

Brent crude broke above $87 a barrel and WTI climbed 5.26 percent to $82, reclaiming its 50-day moving average, after President Donald Trump publicly criticized Iran's demand for war reparations in the talks. Iran's Supreme Leader Mojtaba Khamenei responded by appointing six senior military commanders across the armed forces general staff, Revolutionary Guards and Basij militia.

The standoff is rippling through energy markets. European diesel futures jumped more than 10 percent in post-settlement trading, and US diesel prices climbed. European gas futures rose as much as 10 percent intraday, with storage at about 59 percent of capacity versus a five-year average near 76 percent and less than three months before winter heating demand begins. US strategic petroleum reserves fell to their lowest since 1983, approaching the roughly 250 million barrel operating floor.

Nvidia's $500 Billion Plan Stirs Circular-Financing Doubts

Nvidia shares fell 2.9 percent after the Financial Times reported the chipmaker is in talks with Apollo Global Management, Blackstone, BlackRock's Global Infrastructure Partners, Brookfield Asset Management, Goldman Sachs and KKR to raise as much as $500 billion for AI infrastructure spanning chip purchases, power generation and data centers.

The plan deepened investor concern that Nvidia is inflating demand and valuations across the AI industry through circular financing, in which the same firms that depend on AI's boom help fund the buildout. Bloomberg later cited people familiar with the matter saying the structure has raised questions about the authenticity of demand. Intel fell 4.1 percent after announcing plans to sell about $15 billion in new shares, its first public offering since its 1971 listing. Micron dropped 1.89 percent and Broadcom lost 1.25 percent.

CPI Looms as Rate-Hike Bets Rebuild

Friday's July payrolls report, which showed employers unexpectedly cut 23,000 jobs, had trimmed September hike odds, but the oil rebound largely erased that dovish impulse. Markets now price about a 54 percent chance of a September increase. Cleveland Fed President Beth Hammack said she does not rule out needing multiple hikes to bring inflation back to target, without prejudging the terminal rate.

"While the jobs report eased some concerns about a September hike, those worries could climb to new highs if this week's inflation data fails to come in below expectations," said Chris Larkin, managing director at Morgan Stanley. The dollar rebounded, erasing its post-payrolls decline, while the yen fell about 1 percent to 159.30 per dollar. Gold still rose 1.1 percent to above $4,350, while bitcoin slipped 1.7 percent to $63,978 and ether fell 2.3 percent to $1,876.

European equities held up, with the euro-area STOXX 50 rising 0.18 percent to a record close and Germany's DAX and France's CAC 40 also setting records.

This article is for informational purposes only and does not constitute investment advice.