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S&P 500 stocks finished lower on Monday as semiconductor shares came under heavy pressure ahead of Nvidia’s closely watched earnings report. Investors also assessed a new US sanctions campaign against Iran and another escalation in trade tensions between the United States and Canada.
The S&P 500 declined about 0.3%, while the tech-heavy Nasdaq Composite dropped roughly 0.8%. The Dow Jones Industrial Average rose approximately 0.3%, making it the only major US benchmark to close in positive territory. The mixed session followed weekly losses for the major indexes and reflected growing caution around highly valued technology shares.
S&P 500 Faces Fresh Tech Pressure Before Nvidia Earnings
Semiconductor stocks led the market’s decline. Nvidia shares fell nearly 3%, extending the company’s losing streak to seven consecutive sessions, its longest slide since October 2022. The decline came just days before the artificial intelligence chip leader is scheduled to report quarterly results on Wednesday.
Memory-chip companies suffered even sharper losses. Sandisk dropped more than 7%, while Micron, Seagate Technology, and Western Digital each fell more than 5% at various points during the session. The moves represented a notable rotation away from some of 2026’s biggest winners. Yahoo Finance calculations showed that the top-performing 10% of S&P 500 companies this year were among the market’s weakest performers early Monday.
Pressure increased after reports that Nvidia had notified some customers of plans to raise prices for certain AI servers by more than 15% early next year. Rising memory-chip costs were cited as a factor. Investors worried that higher prices could eventually affect demand for AI infrastructure and put pressure on profit expectations across the technology supply chain.
Reports that Apple may source DRAM and NAND flash memory from Chinese semiconductor companies CXMT and YMTC also weighed on memory stocks. Meanwhile, Samsung shares fell sharply after its proposed $80 billion shareholder-return plan failed to impress investors.
Critical Nvidia Earnings Test the AI Trade
Nvidia’s upcoming results have become a critical test for the broader AI investment story. The company has repeatedly delivered strong financial results, but its stock has often struggled immediately afterward. According to Yahoo Finance analysis, Nvidia shares fell following six of the past eight earnings reports, including each of the last four.
That pattern highlights the market’s exceptionally high expectations. Investors are looking for more than an earnings beat. They want evidence that AI spending is translating into durable revenue, stronger free cash flow, and measurable returns for customers.
As per Morgan Stanley strategists led by Nicholas Lentini, mentions of “ROI” and “monetization” have increased during recent earnings calls. Management teams are facing more questions about when heavy AI capital spending will generate financial payback. The strategists said fundamentals remained strong after the second-quarter earnings season, but companies increasingly need to show rising free cash flow alongside earnings growth.
Explosive Iran Sanctions Add Geopolitical Risk
Markets also reacted to Treasury Secretary Scott Bessent’s announcement of “Operation Economic Outcast,” an expanded sanctions campaign designed to isolate Iran economically. Bessent said the United States intended to “sever every economic lifeline” supporting the Iranian regime.
The measures target Iran as well as countries and organizations that maintain financial or commercial connections with it. Bessent warned that nations continuing to engage economically with Iran after a US grace period could be removed from the US dollar system.
The announcement raised immediate questions about China, which is the primary buyer of Iranian oil. Bessent said the Treasury Department would target every facilitator and network involved in oil smuggling or sanctions evasion, but he declined to identify specific Chinese entities or describe potential enforcement actions.
The US dollar rose modestly after the announcement. However, the broader market response remained restrained, suggesting that investors were more focused on technology earnings and the potential economic effects of escalating sanctions.
Urgent Canada Tariff Threats Hit Automakers
Trade tensions added another source of uncertainty. After US-Canada negotiations broke down over the weekend, President Donald Trump threatened to raise tariffs on Canadian automobiles, auto parts, and steel to 50% beginning January 1, 2027.
Shares of Ford and General Motors moved lower, while Tesla and Stellantis also declined. Canadian Prime Minister Mark Carney suspended negotiations and promised like-for-like retaliation. Bloomberg reported that Canada’s government is preparing domestic support for businesses affected by tariffs and sees a significant risk that the dispute could continue beyond the US midterm elections.
For investors, the combination of technology-sector volatility, geopolitical sanctions, and trade uncertainty creates a challenging backdrop. The next major market catalyst is Nvidia’s Wednesday report, which could either restore confidence in AI spending or intensify the rotation away from the year’s biggest winners.
FAQs About the S&P 500 Market Drop
Why did the S&P 500 fall on Monday?
The S&P 500 declined as semiconductor stocks sold off ahead of Nvidia’s earnings report. Investors were also reacting to new Iran sanctions and rising US-Canada trade tensions.
How much did Nvidia stock fall?
Nvidia shares dropped nearly 3% on Monday, marking the company’s seventh consecutive daily decline.
What is Operation Economic Outcast?
Operation Economic Outcast is a sanctions campaign announced by Treasury Secretary Scott Bessent to isolate Iran and penalize nations or entities that continue economic ties with the country.
When will Nvidia release its earnings?
Nvidia is scheduled to release its quarterly earnings report on Wednesday, August 26, 2026.
What could happen next for the S&P 500?
Market direction may depend on Nvidia’s results, its outlook for AI demand, and whether investors see stronger evidence of monetization and free-cash-flow growth.
