It was a Monday that had a little bit of everything: geopolitics, interest rate anxiety, a California policy earthquake, and some good old-fashioned corporate drama. Let's dig in.
The big macro story is oil. Over the weekend, the U.S. and Iran traded blows, and the market woke up to a very different energy landscape. President Trump posted late Sunday that Iran's main crude export terminal was "being blown to smithereens," and Iran's Revolutionary Guards said they'd struck U.S. bases in Jordan and the UAE in retaliation. That's the kind of headline that gets traders' hearts racing.
West Texas Intermediate crude jumped 2.5% to $85.49 a barrel, while Brent added 2.7% to $90.47. That's a big move, and it feeds straight into the rates market because higher oil means higher inflation, which means the Fed has to stay hawkish.
And indeed, the 10-year Treasury yield rose 5 basis points to 4.76%, a fourth consecutive advance and the highest since January 2025. The 30-year climbed 6 basis points to 5.26%, while the 2-year eased 1 basis point to 4.34%. The yield curve is doing its thing, and it's not pretty for stocks.
Traders now assign roughly a 64% probability to a 25-basis-point rate hike at the Sept. 16 Federal Reserve meeting, up from about 40% a week ago. That's a big shift. Fed Chair Kevin Warsh's Jackson Hole remarks on Friday, warning the central bank would "have work to do" absent progress toward the 2% target, did the initial damage. Oil just poured gasoline on the fire.
So equities took a hit. The S&P 500 slipped 0.5% to 7,677, while the Dow Jones Industrial Average shed 336 points, or 0.6%, to 53,224. Chevron Corp. (CVX) led the blue chips higher with a 2.8% gain, because of course it did. The Nasdaq 100 fell 0.6% to 29,269. The Russell 2000 underperformed, down 0.9% to 2,947.
Gold eased 0.4% to $4,437 an ounce, still up 9.4% over the past month but 4.6% below last week's level. Bitcoin (BTC) bucked the risk-off tone and gained 1.4% to $78,800. Crypto doing its own thing, as usual.
Monday's Performance In Major US Indices
According to market data:
- The Vanguard S&P 500 ETF (VOO) fell 0.5%.
- The SPDR Dow Jones Industrial Average ETF Trust (DIA) slid 0.7%.
- The Invesco QQQ Trust (QQQ) eased 0.3%.
- The iShares Russell 2000 ETF (IWM) dropped 0.9%.
Sacramento Torches California Utilities; Oil Names Ride The Crude Rally
Let's talk sector action. The Energy Select Sector SPDR Fund (XLE) was the only S&P 500 sector in positive territory, up 0.8%. That's the oil rally. The Utilities Select Sector SPDR Fund (XLU) was the worst performer, down 1.2%, followed by the Industrials Select Sector SPDR Fund (XLI) at -1.2%, the Real Estate Select Sector SPDR Fund (XLRE) at -1.1% and the Communication Services Select Sector SPDR Fund (XLC), also down 1.1%. The Technology Select Sector SPDR Fund (XLK) was effectively flat.
Among industry funds, the VanEck Oil Services ETF (OIH) led with a 1.1% gain and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) added 0.3%. Makes sense.
Fuel buyers and rate-sensitive corners were hit hardest: the U.S. Global Jets ETF (JETS) tumbled 2.1% on the jet fuel bill, the Invesco Solar ETF (TAN) lost 2.0%, the VanEck Gold Miners ETF (GDX) fell 1.5% alongside bullion and the iShares U.S. Home Construction ETF (ITB) dropped 1.3% as long yields climbed. Higher rates, higher fuel costs, bad for those.
Major Moves Out of Sacramento…
Now for the real drama. California utilities got crushed. Edison International (EIX) collapsed 23.1% – its steepest one-day decline since 2001 – after California lawmakers introduced a wildfire response bill on Saturday that does not shift liability away from investor-owned utilities, having already rejected a proposal to phase out insurer subrogation rights ahead of Monday's legislative deadline. Ouch.
Mizuho cut Edison to Neutral from Outperform and slashed its price target to $70 from $86, while Barclays moved to Equal Weight with a $75 target. Wall Street is not happy.
PG&E Corp. (PCG) plunged 18.6% on the same catalyst after SB 492 was amended to strip out the utility liability protections, adding to a 7.5% drop on Friday. BMO Capital downgraded PG&E to Market Perform from Outperform and cut its target to $21 from $28. Sempra (SRE) was also caught in the downgrade wave, with Mizuho moving to Neutral and taking its target to $84 from $104. It's a bloodbath.
But it wasn't just utilities. Howmet Aerospace Inc. (HWM) sank 8.7% after SpaceX confirmed it will cast gas-turbine hot-section blades and vanes in-house at a new foundry in Bastrop, Texas – a direct disintermediation risk for a company holding more than half the global turbine blade market, and one whose industrial gas turbine exposure had been central to the bull case. That's a big deal. If SpaceX does it in-house, maybe others will too.
Aon plc (AON) fell 7.4% after agreeing to acquire insurance broker USI from KKR and other shareholders for $17 billion. That's a big acquisition, and the market seems to think Aon overpaid or is taking on too much risk.
Elsewhere, Take-Two Interactive Software Inc. (TTWO) dropped 6.5% as Grand Theft Auto VI footage leaks continued to spread ahead of the Nov. 19 launch. Leaks can be bad for hype, I guess.
On the Upside
But it wasn't all doom and gloom. Ascendis Pharma A/S (ASND) rallied 6.1% after signing a binding term sheet with BioMarin for a global settlement and license agreement covering YUVIWEL (navepegritide). Good news for the pharma.
Roblox Corp. (RBLX) climbed 6.0% after Citi flagged third-party RoMonitor tracking data showing quarter-to-date engagement trends implying Q3 bookings of roughly $1.68 billion, above the company's $1.57-$1.65 billion guidance range and consensus near $1.61 billion. That's a nice beat, if the data is right.
Within tech, Tesla Inc. (TSLA) was the standout, rallying 5.1% following confirmation that Optimus has entered production at Fremont on converted Model S and Model X lines, the announcement of a Semi rollout event on Sept. 24 at its Sparks, Nevada plant, and the launch of a lower-priced rear-wheel-drive Model 3 in Hong Kong at roughly $26,000. Lots of catalysts there.
Monday's Russell 1000 Top Gainers
Monday's Russell 1000 Top Losers
So there you have it. A day where oil and rates ruled, California utilities got caught in the political crossfire, and Tesla gave bulls something to cheer about. It's a lot to digest, but that's the market for you. Always keeps you on your toes.
