Stock market today: Dow, S&P 500, Nasdaq futures fall as US strikes Iran, rate-hike bets jump

US stocks declined on Monday after the US attacked Iran for the first time in weeks, fueling a rise in oil prices and increased bets that the Federal Reserve would raise interest rates at its September meeting.

The Dow Jones Industrial Average ( ^DJI ) fell 0.7%, while the S&P 500 ( ^GSPC ) declined by 0.3%. The tech-heavy Nasdaq Composite ( ^IXIC ) dropped 0.1%, though all three major indexes posted solid gains for the month.

The S&P 500 gained more than 2.5% for the month, while the Nasdaq rose more than 3%. The Dow rose 1.3%.

Renewed hostilities in the Middle East put pressure on stocks after the US struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz. Oil prices jumped on worries that the conflict could escalate again, with Brent crude futures ( BZ=F ) rising over $88 per barrel.

The ongoing war in Iran has been a key factor keeping inflation concerns alive. On Friday, Fed Chairman Kevin Warsh delivered a speech in Jackson Hole, Wyo., stating that inflation was running too hot and that the central bank has "work to do." Over the weekend, traders lifted their bets that the Fed would raise rates by 25 basis points at its next meeting to 62%, up from roughly 40% a week ago.

With earnings season largely in the rearview mirror and Monday bringing a relatively quiet day for economic data, investors will turn their attention toward the Labor Department's monthly jobs report on Friday.

U.S. stocks fell on Monday but still closed out August with solid gains, as rising oil prices fueled concerns about persistent inflation ahead of the Federal Reserve's September policy meeting.

The Dow Jones Industrial Average ( ^DJI ) dropped 0.7% but closed out the month with gains of roughly 1%. The S&P 500 ( ^GSPC ) declined by 0.3%, but rose more than 2.5% during August. The tech-heavy Nasdaq Composite ( ^IXIC ) dropped 0.1%, but also finished the month with gains of more than 3.5% over the past month.

Investors will get a read of the monthly jobs report later this week, providing a clue on how Fed officials may vote later next month when policymakers meet.

The market has given the Fed a more than 50% chance of raising interest rates by 25 basis points after Fed Chairman Kevin Warsh gave hawkish commentary last week at Jackson Hole.

The lawsuit is expected to claim that the price manipulation practice generated tens of billions of dollars in profit for the company over seven years.

Gold ( GC=F ) fell on Monday, but was still on track to close out its best month since February as central bank purchases and ETF inflows lifted demand for the hard asset.

The precious metal has risen almost 10% in August, despite a recent pullback following Federal Reserve Chair Kevin Warsh's signal that interest rate increases may be necessary to bring inflation under control.

US strikes on Iranian rocket launchers in the Strait of Hormuz region also reignited inflation fears as oil prices jumped.

Gold futures for December delivery slipped by about 1% to hover near $4,480 per troy ounce.

Frontier AI models, such as those developed by OpenAI ( OPAI.PVT ) and Anthropic ( ANTH.PVT ), threaten a new realm of cyberattacks that could target and destabilize the global financial system, Bank of England Governor Andrew Bailey said on Monday.

In a letter submitted to G20 financial leaders and central bank chiefs, published Monday by the Financial Stability Board, which Bailey chairs, the BOE governor wrote that frontier AI models are " showing increasingly sophisticated autonomy and problem-solving abilities, as well as threat capabilities."

Those capabilities constitute a particularly strong threat to the global financial system, Bailey said, arguing that those risks posed by frontier AI "will not respect national borders."

"The global financial system is highly interconnected, and cyber disruption can spread across jurisdictions through common technology providers, shared infrastructure, and cross-border financial activity," Bailey wrote to the G20. "Frontier AI may have the ability materially to alter the speed, scale and economics of cyber risk, which could undermine market confidence system-wide."

Many jurisdictions haven't yet established protocols to deal with such a threat, Bailey said. Addressing those gaps, the BOE governor wrote, "should in my view be a priority and would benefit all sectors of the economy, including by supporting financial stability and economic growth."

Bailey's warning comes after steps by some of the US's major financial institutions to do just that. The development of Anthropic's most capable "Mythos" model prompted a range of concerns over its ability to identify and exploit vulnerabilities in systems previously thought secure.

While the model has not been opened for public use, a small collective of governments and major institutions has been given access to the model to use it themselves to identify security weaknesses. While the full list of participants hasn't been published, JPMorgan Chase and Intercontinental Exchange have both been publicly confirmed as partners in what Anthropic has dubbed "Project Glasswing."

US Treasury bonds came under pressure again on Monday as oil prices rose, keeping concerns about above-target inflation in focus.

The 10-year yield ( ^TNX ) rose 4 basis points to 4.76%, its highest intraday level going back to January 2025. The 30-year yield ( ^TYX ), meanwhile, climbed 5 basis points to 5.26%. Yields and prices have an inverse relationship, so when yields rise, bond prices fall.

On Sunday, the US struck Iranian rocket launchers, and then Iran launched strikes against US ally Jordan. With both sides appearing far apart on a ceasefire deal that would fully reopen the Strait of Hormuz, expectations that higher energy prices will affect broader inflation are rattling investors, particularly as markets reprice the likelihood of a Federal Reserve interest rate hike in September.

Nvidia ( NVDA ) has agreed to invest $3.5 billion in Taiwanese chipmaker MediaTek, per a statement Monday morning, deepening Nvidia's already large web of investments throughout the AI ecosystem.

"NVIDIA and MediaTek today announced a deepening of their longstanding collaboration to build the next generations of AI computing platforms, spanning AI infrastructure, local AI computing and automotive," the companies said in a joint statement, noting the combination will combine Nvidia's computing platforms with MediaTek's chip design capabilities.

Shares in Nvidia trended up by roughly 1% on Monday morning.

The deal is set to broaden an existing partnership between the two AI companies. Under this round of investment, MediaTek will use Nvidia's NVLink Fusion technology, among other applications, which functions as connective tissue that allows customers to plug their own chips into Nvidia's underlying data center architecture.

NVLink Fusion will allow MediaTek to "provide hyperscalers, cloud service providers and frontier model developers with a prevalidated path to develop custom XPUs and bring them into NVIDIA NVLink™-connected, rack-scale AI factories," the companies said in their statement.

The investment from Nvidia, adding to billions of dollars Jensen Huang's company has invested in companies throughout the AI ecosystem, comes as Nvidia increasingly focuses on positioning its technology as the base architecture for the AI build-out, moving toward a place where the entire AI ecosystem runs on Nvidia's systems.

"The part that people don't see about our growth because we're practically singular because of the nature of how we deliver products. I mean we're the only company in the world that creates and builds, offers an entire AI factory platform, a full-stack system," Huang said on the company's second quarter earnings call.

GameStop ( GME ) shares jumped about 3% in early trading on Monday.

The video game retailer announced preliminary results for its second quarter, saying it expects a boost in Q2 profit in part due to its stake in eBay ( EBAY ).

The video game retailer said it expects net income of $290 million to $310 million for its quarter ending August 1, compared to net income of $168.6 million in the prior year's second quarter.

GameStop converted its eBay derivative position into eBay shares, which generated about $238 million in gains. The video game retailer owns 43.4 million shares of eBay common stock worth more than $4.9 billion. The eBay stake is doing the heavy lifting for the company's bottom line, as the company's revenue is expected to decline.

US stocks fell after the opening bell on Monday after the US and Iran exchanged fire for the first time in roughly a month, sending oil prices higher and re-stoking inflation fears just as bets rise for a coming rate hike by the Federal Reserve.

The Dow Jones Industrial Average ( ^DJI ) slipped by 0.5%, while the S&P 500 ( ^GSPC ) declined by 0.4%. The tech-heavy Nasdaq Composite ( ^IXIC ) fell 0.3%.

With second quarter earnings largely in the rear view after Nvidia's ( NVDA ) bombastic report last week, attention has turned back toward the macro economy, with investors fresh off Fed Chairman Kevin Warsh's speech, more hawkish than maybe expected, in Jackson Hole.

While conflict between the US and Iran appeared to calm after the initial exchange of strikes over Sunday and Monday, signs of further flare-ups could rekindle worries about higher energy prices, feeding through to above-target inflation.