By Avinash P and Purvi Agarwal
Aug 10 (Reuters) - Wall Street's main indexes were subdued on Monday after a recent rally that took the S&P 500 and the Dow to record highs, as investors weighed Middle East developments that lifted oil, while awaiting crucial inflation data and earnings.
Iran said it was close to a final agreement with Oman defining new shipping lanes between them, but repeated that the U.S. must meet several conditions before the strategic waterway reopens.
Brent crude prices gained
more than 4% on Monday as Iran's insistence left the outlook for the Strait of Hormuz's reopening murkier.
Easing energy flows through the crucial choke point could mitigate concerns over heightened oil prices that have spurred inflation worries and bets on interest rate hikes by central banks worldwide.
Investor focus now turns to consumer and producer inflation readings due later this week, which could offer clues on the Federal Reserve's monetary policy path, given Fed Chair Kevin Warsh's stance of offering muted forward guidance.
Rate-hike bets were tempered on Friday after data showed the U.S. economy unexpectedly shed jobs in July. Traders now price in a 44% chance of a rate hike in September, according to the CME FedWatch tool.
"Investors (are) just really looking through on the fundamentals. There's a lot of headlines, a lot of geopolitical worry, there's inflation concerns, but at the end of the day, we still see strong earnings growth and we still see a resilient consumer," said Bret Kenwell, U.S. investment analyst at eToro.
In the market, the S&P 500 energy index jumped 3.3%. However, weakness in real estate and utilities offset gains.
The S&P 500 information technology index lost 0.4%. Apple declined 2% following a stock downgrade by Jefferies, while Intel dropped 3.2% after launching a $15 billion stock offering.
At 11:56 a.m. ET, the Dow Jones Industrial Average fell 46.64 points, or 0.09%, to 53,991.40, the S&P 500 gained 6.98 points, or 0.09%, to 7,764.62 and the Nasdaq Composite lost 26.49 points, or 0.10%, to 26,663.65.
The benchmark S&P 500 hit a record close on Friday and the blue-chip Dow touched all-time highs last week, as solid earnings, especially from AI companies, offset some concerns about high spending not yielding enough evidence of paying off.
Against that backdrop, J.P.Morgan raised its year-end target for the benchmark to 8,000 from 7,800.
A total of 85.1% of the 436 companies in the S&P 500 that have reported earnings to date for the June quarter have beaten estimates, more than the 67% seen in a typical quarter since 1994, according to LSEG data.
The earnings calendar thins out this week, with semiconductor company Applied Materials and networking equipment maker Cisco among the few reporting.
Among others, eBay fell 3.9% after Bloomberg News reported that GameStop CEO Ryan Cohen was considering pulling the company's $56 billion bid.
Comments from Cleveland Fed President Beth Hammack are expected later in the day.
Separately, the U.S. Senate passed a temporary bill to fund federal agencies through December 11 on Saturday, averting a crippling shutdown weeks before the November midterm elections.
Declining issues outnumbered advancers by a 1.4-to-1 ratio on the NYSE and by a 1.37-to-1 ratio on the Nasdaq.
The S&P 500 posted 19 new 52-week highs and one new low, while the Nasdaq Composite recorded 76 new highs and 51 new lows.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Maju Samuel)
