Stocks fell Monday alongside a jump in bond yields and erratic oil trading as geopolitical upheaval remained front and center for traders.
The S&P 500 ended lower by 0.7% and the Nasdaq Composite dropped 0.9% as oil prices rose, pushing Brent crude oil back above $106 per barrel.
Earlier in the day, Brent rose beyond $108, but the jump moderated after reports said mediators planned to meet with U.S. and Iranian officials separately to discuss the stalemate between the two sides over the war with 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.
Other reports throughout the day that said President Donald Trump was open to offering Iran economic concessions to reboot talks and reach a deal also took some of the heat off oil prices. NBC News has not confirmed those reports.
Over the weekend, Trump said he had rejected a recent proposal from Iran to reopen the Strait of Hormuz, through which critical energy supplies flowed before 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.
Bond yields also surged to fresh multiyear highs.
The 10-year U.S. Treasury yield rose as high as 5.27%, its highest since mid-June 2007. A wide swath of other Treasurys also continued to trade above 5%, and the yield on the 30-year bond hit its highest level since May 2004.
The 2-year Treasury, which is often viewed as a signal of where the market expects central bank rates to go, reached its highest level since 2024.
Market watchers’ anxiety has grown alongside the rise in bond yields.
“The significant increase in oil prices so far this year hasn’t knocked the wind out of the global economy’s sails,” longtime market analyst Ed Yardeni wrote Saturday. “The question is whether rapidly rising interest rates will do so.”
“Unfortunately, these higher rates also exacerbate the outlook for large government deficits worldwide,” wrote Yardeni, president of Yardeni Research.
Still, stocks have largely remained resilient in the face of rising inflation from higher oil prices and bond yields that keep shooting higher.
Part of the reason “is that financial conditions have changed little” since January, analysts at Goldman Sachs said. They added that “the substantial rise in interest rates has been nearly offset by the effects of higher equity prices.”
But the equity market’s rise this year has been driven primarily by just a few sectors, which troubles some analysts.
For the year so far, the S&P 500 has risen a little more than 12%. But a look under the hood reveals a different story. The information technology sector has gained 27% this year, and the energy sector has added 38%.
The healthcare, industrials and materials sectors are up 10%. But the real estate, consumer staples and communication services sectors have all gained less than 7%. The utilities, financial and consumer discretionary sectors have all contracted.
On top of higher oil prices, rising bond yields and geopolitical headlines that could swing stocks in either direction at a moment’s notice, the end of the month features prominent central bank meetings, including meetings at the Federal Reserve, where rates could rise further.
