U.S. stocks declined on Monday as investors reacted to rising oil prices and higher Treasury yields, heightening concerns about inflation and increased borrowing costs. The S&P 500 and Nasdaq Composite both fell by 0.6%, while the Dow Jones Industrial Average saw a 0.4% decrease.
The drop in stock indices followed a brief spike in Brent crude oil prices, which surpassed $100 a barrel before settling at approximately $97.61. This volatility in oil prices is linked to uncertainties surrounding the flow of tankers through the Strait of Hormuz amid ongoing tensions involving Iran. As energy prices climb, inflation worries grow, further pressured by a notable rise in U.S. gasoline prices over the past year.
Inflation concerns have also driven Treasury yields higher, with the 10-year yield increasing from 5.17% to 5.24% and the 30-year yield rising to 5.56%. Such increases in borrowing costs can impact both businesses and consumers, potentially reducing the attractiveness of stocks and other investments.
Airline stocks were among those affected, with American Airlines and United Airlines experiencing declines as investors evaluated the impact of heightened fuel costs on their operations. Additionally, gold-related stocks weakened, coinciding with a sharp drop in gold prices during the trading session.