U.S. stock markets closed lower Monday as investors contended with a sharp rise in Treasury yields and volatile oil trading. The S&P 500 fell 0.77% and the Nasdaq Composite dropped 0.92% as the 10-year Treasury yield surged to its highest levels since 2007, reflecting mounting anxiety over future Federal Reserve interest rate hikes.
Market Declines Amid Rising Yields
Major U.S. stock indices ended the Monday session in the red, pressured by a significant jump in government bond yields. The Dow Jones Industrial Average dropped 347.11 points, or 0.67%, to close at 51,481.51. Meanwhile, the S&P 500 slid 0.77% to end at 7,683.69, and the Nasdaq Composite slipped 0.92% to 26,820.38. During the session’s deepest troughs, the Dow slumped past 400 points, while the S&P 500 registered a decline of approximately 1%. The index was pulled down by Boeing shares, which finished the session nearly 7% in the red following an announcement from the Federal Aviation Administration stating it will withhold certification for the aerospace manufacturer’s 737 Max 10 until an evaluation of a newly discovered software bug is complete.
The catalyst for the sell-off was a sharp move in Treasury yields, with the benchmark 10-year Treasury note yield climbing above 5.2% and the 30-year bond yield topping 5.5%. Both traded around multiyear highs, with the 10-year U.S. Treasury yield rising as high as 5.27%, its highest level since mid-June 2007. The two-year Treasury note, frequently monitored as an indicator for anticipated central bank monetary policy shifts, climbed to its peak value not seen since 2024. Justin Bergner, portfolio manager at Gabelli Funds, told CNBC that those yields have come back up meaningfully today, and that's causing an understandable weakness in the tape.
He added, The competition for capital with AI hyperscaler spending … also pressures the consumer with higher rates, so it kind of makes the market more one-sided than it already is.
Geopolitical Tension and Oil Price Volatility
Energy markets experienced erratic trading throughout the day as geopolitical upheaval remained front and center for traders, pushing Brent crude oil back above $106 per barrel. Earlier in the session, Brent touched prices exceeding $108, though that surge eased after news emerged that intermediaries intended to hold separate discussions with Iranian and U.S. representatives to address the ongoing deadlock regarding the conflict involving Iran. Iran’s semiofficial ISNA news agency downplayed the significance of the meetings, saying that Iran’s foreign minister, Abbas Araghchi, would attend talks with mediators but that no U.S. representatives would be present. Oil prices also received some relief from intraday reports suggesting President Donald Trump was receptive to granting Iran economic incentives to restart negotiations and secure an agreement, although NBC News has not independently verified these claims.
Following reports from CNN and Axios quoting White House sources that indicated Trump was willing to grant Iran sanctions relief regarding nuclear issues, the major market averages recovered from their session lows, causing crude prices to drop significantly from their daily peaks. Over the weekend, President Donald Trump stated that he had turned down a recent overture from Iran proposing the reopening of the Strait of Hormuz, an essential transit route for energy supplies prior to the outbreak of the war. They want to make a deal, and I think that’s fine,
Trump told reporters in Washington. I like making a deal too, but … that deal would not be acceptable.
Monday’s rocky oil trading has been a familiar feature of this year’s turbulent markets.
Nvidia’s Buyback and Tech Sector Performance
Several AI stocks led the major indexes lower on Monday. Advanced Micro Devices and Micron Technology fell 3.6% and 2.6% on the day, respectively. Amazon and Microsoft also edged down 1%, while Meta Platforms shed 4.8%. However, Nvidia bucked the trend in hyperscaler and other AI stocks. Following Monday’s disclosure that the firm intends to repurchase an additional $150 billion of its stock, shares of the company surged 1.7%.
Economic Outlook and Federal Reserve Expectations
Market participants are bracing for a busy week of economic data as market watchers’ anxiety has grown alongside the rise in bond yields.
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