The S&P 500 index was little changed on Monday, trading down 0.1%, as traders closely monitored the ongoing discussions surrounding the Strait of Hormuz. Meanwhile, the Nasdaq Composite declined by 0.4%, and the Dow Jones Industrial Average dropped 136 points, or 0.3%.

Intel was a significant laggard in the market, with its shares falling by 3% after the company announced plans to offer $15 billion in common stock. Other notable decliners included Nvidia and Apple, both of which saw their stock prices decrease by 2%.

On the geopolitical front, Iran has indicated progress towards a deal with Oman to reopen the Strait of Hormuz. However, Iranian Foreign Minister Abbas Araghchi stated that direct negotiations with the U.S. would not resume until certain conditions are met, particularly concerning U.S. compliance with a previous memorandum of understanding.

As uncertainty looms over the market, oil prices experienced a rise, with U.S. West Texas Intermediate crude futures increasing by about 4% to around $81 per barrel. This spike in oil prices is attributed to dwindling stockpiles in the U.S. Strategic Petroleum Reserve, which have reached their lowest levels since January 1983. International benchmark Brent crude futures also rose by 4%, trading at approximately $87.

Last week, Treasury Secretary Scott Bessent hinted at the possibility of a deal being imminent, but President Donald Trump later clarified that the U.S. was only "semi-negotiating" with Iran, emphasizing the need for economic pressure on the Middle Eastern nation.

Market analysts suggest that while tensions in the Middle East continue to influence trading, the fundamentals of the earnings season remain strong. Zachary Hill, head of portfolio management at Horizon Investments, noted that each flare-up in tensions has been of a smaller magnitude compared to previous instances, which may be impacting market behavior.

The three major U.S. indexes recently concluded their best week since April, with the S&P 500 reaching an all-time closing record. Stocks received a boost following the release of the July nonfarm payrolls report, which showed an unexpected contraction, leading investors to speculate that the Federal Reserve might delay interest rate hikes.

As of now, futures traders are pricing in a nearly 50% likelihood that the Federal Reserve will raise rates at its September meeting, a decrease from the 67% probability noted the previous week.