Somebody forgot to tell the Dow Jones Industrial Average (^DJI +0.29%) that Monday was supposed to be rough.
The Nasdaq Composite (^IXIC +0.62%) dropped 1.2% as of 12:30 p.m. ET, weighed down by Alphabet (GOOG +3.57%) (GOOGL +3.15%) and Space Exploration Technologies (SPCX 0.61%). The S&P 500 (^GSPC +0.38%) took a lighter hit without the Nasdaq's SpaceX influence, slipping 0.3%. Meanwhile, the Dow was up 0.4%, blissfully undaunted by the chaos elsewhere.
Two stocks, $481 billion in damage
SpaceX dropped 10.3%, easily its worst day since going public on June 12. Currently at $2.19 trillion, its market cap took a $227 billion cut.
Shares ran up as much as 67% from the IPO price in the first few sessions, or 15% from the first trading day's closing price. Now they're giving back a chunk of that surge. The stock has seen three straight down days, dropping 16% from its highs last Tuesday.
There's no dramatic news to explain the price drop, just Wall Street's gravity doing its thing after a hyped start at escape velocity. Today's retreat was bad news for the Nasdaq Composite index, where SpaceX became an active component at the close of Day One.
Image source: The Motley Fool.
Google parent Alphabet fell 6%, erasing about $254 billion of market capitalization. Noam Shazeer, vice president of engineering and co-lead of Google's Gemini AI models, is leaving the company to work at ChatGPT maker OpenAI instead. Shazeer joined Google's DeepMind division in 2024, when the company bought his Character.AI business for $2.7 billion.
It was a split day on the Dow. Two of the largest point-changing moves were up and the other two went down. Caterpillar (CAT 2.06%) towered over the index, adding 226 points at a 3.7% gain. Falling oil prices and easing tensions with Iran are good news for heavy equipment makers. Signs of stabilization in the Middle East also support financing of capital-intensive AI data center construction projects, giving Caterpillar another direct boost from recent news.
Speaking of the Middle East, the United States Oil Fund (USO +1.01%) sank 2.7% after the Treasury Department authorized Iranian oil sales for 60 days. The Strait of Hormuz drama from the weekend, showing cracks in the current ceasefire, was apparently just "threatening and whining," according to Vice President JD Vance. Talks continue, and oil shipping through the Strait remains minimal.
Dow Jones Industrial Average
Key Data Points
Two problems, not twenty
Here's the silver lining: Monday's mess comes down to two stocks having very bad days. Alphabet is losing some very expensive AI talent to the competition. SpaceX is learning that what goes up 67% in a week sometimes comes back down in a hurry.
The Iran situation deserves your attention, of course. Treasury's 60-day oil license buys time, but the Strait of Hormuz remains far from normal. Ship traffic hit 35 crossings on Saturday before dropping to 17 on Sunday amid confusion over whether the waterway was actually open.
Investors await Thursday's personal consumption expenditures price index, the Federal Reserve's preferred inflation measure. After the Fed's hawkish tone last week, every decimal point matters. Futures markets have moved expectations of a rate increase to as early as October.
