Stocks closed lower for a second straight session as a Middle East oil shock overwhelmed a still-resilient AI-capex bid.
The Dow shed 628 points (-1.18%) to 52,786, the S&P 500 fell 0.58% to 7,673.52 and the Nasdaq lagged less, down 0.32% to 26,421, after Houthi drone/missile strikes hit Saudi oil infrastructure and cities, extending WTI's rally to a sixth straight day and keeping the 10-year pinned near 4.8%. Healthcare led the damage, XLV down roughly 2% as Novartis' twin failed drug trials dragged Amgen, Dyne and Sarepta; financials were soft too. Energy, power and select tech offset the bleed — semis and optical names (SOX, AAOI, LITE, CIEN) ran on GPT-6 Astra compute-cycle chatter, nuclear/SMR (OKLO, SMR, LEU) stayed bid, and Intel popped over 7% on a Northland upgrade tied to its Terafab tie-up. Enterprise software was the other loser, with Salesforce, Intuit and ServiceNow down 4-5% on fears AI erodes their moats.
Price closed back below the indicative SPY flip, still inside the recent range, with dealers likely long gamma above and short below — expect chop, not trend, until data breaks the standoff. QQQ held up better on semi strength, defending support near recent lows. Into the overnight: light data today, but PPI Thursday and CPI Friday land directly ahead of the September 15-16 FOMC, already in its quiet period, with Oracle's print this week the next AI-capex tell.
The risk: another headline out of the Gulf pushes oil and yields higher together, forcing a hawkish CPI repricing that breaks dealers short gamma and turns this chop into a real leg lower.