US STOCKS-S&P 500, Nasdaq fall, dragged by Alphabet and megacap tech; focus on Iran

The S&P 500 and Nasdaq fell on Monday, dragged lower by declines in megacap tech stocks, including Alphabet, amidst concerns over infrastructure spending and U.S.-Iran negotiations.

‌The ​S&P 500 and the Nasdaq fell on Monday, dragged lower by declines in megacap technology stocks including Alphabet, while investors assessed developments in U.S.-Iran negotiations. Optimism about artificial intelligence has supported Wall Street's recent rally, but analysts noted that more investors have been questioning lofty ‌spending on infrastructure expansion by hyperscalers. Alphabet tumbled 5.5%. Meta, Amazon and Microsoft fell between 2% and 4.2%. The S&P 500 communication services index was down 4%. "This is a very sentiment-driven sector and the group tends to trade together on a day-to-day basis," said Bill Northey, senior investment director at US Bank. "But as we step back ... some of the strongest fundamentals are within the ‌AI data center buildout space. That includes both the hyperscalers as well as many of the components that go into that continued buildout." The next test for the rally will ‌be Micron Technology's quarterly results on Wednesday. Shares of the memory chipmaker are up nearly 300% this year. SpaceX declined over 10%, extending losses for a third straight session after its stellar debut. The Elon Musk-led company launched its first-ever debt offering on Monday and said it had about $100.8 billion in cash and cash equivalents as of June 19. Eight of the 11 major S&P 500 sectors were in the green. Financials rose 0.7% and industrials ⁠rose 0.8%. Meanwhile, ​software shares were at an over two-month low. At ⁠2:15 p.m. ET, the Dow Jones Industrial Average rose 158.19 points, or 0.31%, to 51,723.26, the S&P 500 fell 21.36 points, or 0.29%, to 7,479.03. The Nasdaq Composite was down 278.73 points, or 1.05%, at 26,239.21. Oil prices fell ⁠as much as 4%, as Washington and Tehran agreed on a roadmap toward a final deal within 60 days. U.S. and Iranian officials made "great progress" at the first round of their talks in ​Switzerland that ended early on Monday, mediators said, although tensions persisted over Lebanon and the Strait of Hormuz. "Energy prices are coming down, which is certainly a catalyst for ⁠both the consumer as well as businesses," Northey said. "On the flip side of that, we came out with a very hawkish (Federal Reserve) under new Chair Kevin Warsh, and it led the market to believe that there will be ⁠a ​more prioritized focus on returning to price stability in the near term." This view on the Fed has lifted U.S. Treasury yields and pressured stock prices lower, he said. A focus this week will be on Thursday's personal consumption expenditures (PCE) data, the Fed's preferred gauge of core inflation. A stronger-than-expected reading could reinforce expectations of a hawkish Federal Reserve, after Warsh underscored ⁠the need to curb inflation at last week's meeting. Markets currently expect a 25-basis-point rate hike from the Fed in September, according to LSEG data. Among other movers, Apogee ⁠Therapeutics jumped nearly 47% after AbbVie said it would ⁠acquire the biotech company for $10.9 billion in cash. AbbVie rose 6.8%. Declining issues outnumbered advancers by a 1.21-to-1 ratio on the NYSE and by a 1.16-to-1 ratio on the Nasdaq. The S&P 500 posted 28 new 52-week highs and 31 new lows while the Nasdaq Composite ‌recorded 136 new highs ‌and 158 new lows.