Major Wall Street indexes declined on Monday after reaching record levels last week, as investors assessed developments in the Middle East and awaited key inflation data and corporate earnings.

By 16:15 GMT, the Dow Jones Industrial Average fell 72.88 points, or 0.13%, to 53,964.05, while the SP 500 declined 5.22 points, or 0.07%, to 7,752.42. The Nasdaq Composite dropped 61.56 points, or 0.23%, to 26,629.06.

The SP 500 posted a record close on Friday, while the Dow Jones reached fresh record levels last week, supported by strong corporate earnings, particularly from artificial intelligence companies. The results helped partly offset concerns over the enormous sums being spent on the technology and the lack of sufficient evidence so far that returns will justify those investments.

Against this backdrop, JPMorgan raised its year-end target for the SP 500 to 8,000 points from 7,800.

Potential agreement

Iran said it was close to reaching a final agreement with Oman to establish new shipping routes between the two countries, but stressed that the United States must meet several conditions before the strategic waterway can reopen.

A resumption of energy flows through the Strait of Hormuz, a crucial global chokepoint, could ease concerns over elevated oil prices, which have fueled inflation fears and strengthened expectations for interest-rate hikes by central banks around the world.

Consumer and producer inflation data due later this week are expected to provide important clues about the Federal Reserve's monetary-policy path, particularly as Fed Chair Kevin Warsh continues to offer limited guidance on the future direction of interest rates.

Expectations for a rate hike declined on Friday after data showed that the US economy unexpectedly lost jobs in July. Traders currently price a 44% probability of a September rate hike, according to the CME FedWatch Tool.

Separately, the US Senate on Saturday approved a temporary funding bill for federal agencies through December 11, averting a government shutdown that could have disrupted government operations just weeks before the November midterm elections.