Wall Street ended lower on Monday as rising Treasury yields revived concerns over further Federal Reserve rate hikes, while oil prices eased from their session highs on renewed hopes for negotiations to end the conflict involving Iran.
The S&P 500 fell 0.8% to 7,683.69, while the Nasdaq Composite dropped 0.9% to 26,820.38. The Dow Jones Industrial Average declined 0.7%.
Nvidia was one of the few major technology stocks to advance, gaining 1.7% after the chipmaker authorised an additional US$150 billion for share buybacks. The move exceeds Apple’s US$110 billion buyback plan announced in 2024.
Oil prices had risen more than US$4 a barrel earlier in the session after US President Donald Trump rejected an Iranian proposal that would have reopened the Strait of Hormuz.
Prices later pared those gains as Qatari mediators prepared to hold talks with both the US and Iran over a possible agreement. US crude settled 19 cents higher at US$92.60 a barrel while Brent gained 96 cents to US$105.28.
Markets are also pricing in a roughly 70% chance that the Fed will raise interest rates again in October following its rate increase earlier this month, its first since 2023.
The prospect of further tightening pushed Treasury yields higher. The 30-year yield reached its highest level since May 2004, while the 10-year yield touched its highest since June 2007 before easing back.
The 30-year yield rose to 5.5704% from 5.502% on Friday, while the 10-year yield climbed 6.98 basis points to 5.251%. The two-year yield, which is particularly sensitive to interest-rate expectations, rose to 4.937%.
“Right now the market narrative is about higher yields for longer and that is putting pressure on equities,” said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut.
“You’ve got to look at economic data. You’ve got to look at the unemployment picture. You’ve got to look at corporate earnings. And as long as those stay robust, current yields shouldn’t be overly disruptive.”
The rise in borrowing costs is also becoming a concern for AI-linked companies, particularly large technology firms whose expansion has been supported by heavy spending and borrowing.
Investors will get further clues on the outlook for interest rates from this week’s US payrolls data and personal consumption expenditures price index, which is the Federal Reserve’s preferred inflation gauge.
Elsewhere, MSCI’s gauge of global stocks fell 0.76%, while the pan-European STOXX 600 ended little changed.
Gold fell sharply, with spot prices down 3.61% at US$4,131.53 an ounce.
The stronger rate outlook also supported the US dollar. The euro fell 0.21% to US$1.1367, while the dollar rose 0.11% against the yen to 157.43.
Japan’s top currency diplomat Atsushi Mimura also warned against excessive weakness in the yen, adding to expectations that authorities remain alert to further declines in the Japanese currency.
Reuters
