The technology-heavy Nasdaq closed lower on Monday as investors booked profits while surging Treasury yields and high oil prices fueled concerns that inflation and borrowing costs could stay elevated.
The 10-year Treasury yield US10YT=RR, the benchmark for global borrowing costs, climbed to its highest level since February 2025 earlier in the session as continued worries about the disruption of oil supplies stoked concerns that high inflation would keep borrowing costs elevated.
U.S. crude CLc1 settled up more than 3% after a volatile session. Oil pared gains after settlement when U.S. President Donald Trump posted on social media that he was holding off on a planned military attack on Iran scheduled for Tuesday, while efforts continued to reach a deal. But he added the United States was ready to resume attacks in the absence of a deal.
"It seems like the one issue that's been moving markets on a day-to-day basis is oil prices. The main variable is the blockade on the Strait of Hormuz that pushes oil higher and increases the risk in the longer run of inflation expectations becoming unanchored. That lifts Treasury yields," said Burns McKinney, portfolio manager at NFJ Investment Group in Dallas, adding that higher yields are "particularly bad for long-duration stocks, like the tech sector and a lot of the high-flying chip stocks."
RALLY PAUSE
The Nasdaq posted its second straight decline as investors took a break from a rally that started in late March. The S&P closed Thursday's session up more than 18% from its March 30 finish, which was its lowest close since the Iran war began in late February. In the same timeframe, the Nasdaq gained 28% as enthusiasm about artificial intelligence and solid technology earnings helped investors look past inflationary threats.
"There's concern about the rally we've had in a short period of time, and there's some profit taking," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
According to preliminary data, the S&P 500 .SPX lost 4.90 points, or 0.07%, to end at 7,403.60 points, while the Nasdaq Composite .IXIC lost 135.79 points, or 0.52%, to 26,089.35. The Dow Jones Industrial Average .DJI rose 159.52 points, or 0.33%, to 49,688.25.
The heavyweight information technology sector .SPLRCT led declines among the S&P 500's 11 major industry sectors with chip stocks among the biggest drags. Energy .SPNY was the biggest sector gainer during the session.
Traders are pricing in a 37.8% chance that the U.S. Federal Reserve will raise interest rates by 25 basis points by year-end, according to CME's FedWatch tool, after last week's hotter-than-expected inflation readings.
NVIDIA RESULTS IN FOCUS
The world's most valuable company, Nvidia NVDA.O, is scheduled to report results on Wednesday.
Expectations are high for the company, whose shares have risen sharply from a March low, while the Philadelphia SE Semiconductor Index .SOX has surged this year on strong demand for AI-related chips.
Walmart WMT.O, the world's largest retailer, is also expected to report earnings this week, which could offer a clearer picture of how U.S. consumers are coping with high energy prices and broader inflation.
Dominion EnergyD.N shares jumped after power firm NextEra Energy NEE.N said it would buy the utility in an all-stock deal valued at about $66.8 billion. NextEra's shares fell.
Shares of Regeneron REGN.O tumbled as the drugmaker's experimental treatment missed the main goal in a late-stage trial in patients with advanced melanoma, a type of skin cancer.
Reuters
