U.S. stocks saw declines on Monday amid rising oil prices and increased Treasury yields, raising concerns about inflation and borrowing costs. The S&P 500 and Nasdaq Composite both fell by 0.6%, while the Dow Jones Industrial Average slipped by 0.4%. This downturn followed a brief surge in Brent crude prices, which exceeded $100 a barrel before settling around $97.61.
Oil prices remain volatile due to uncertainties surrounding tanker movement through the Strait of Hormuz, a situation exacerbated by the ongoing conflict involving Iran. The resulting increase in energy prices has heightened inflation worries, with U.S. gasoline prices also climbing significantly over the past year.
In response to these inflationary pressures, Treasury yields have risen. The 10-year Treasury yield climbed to 5.24%, up from 5.17%, while the 30-year yield increased to 5.56%. Higher borrowing costs, as a result, can exert pressure on both businesses and consumers, diminishing the attractiveness of stocks and other investments.
Airline stocks were particularly affected as investors considered the impact of higher fuel costs on the industry. American Airlines and United Airlines both reported losses in their share prices. Additionally, gold-related stocks weakened during the session due to a sharp drop in gold prices.