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Major U.S. stock indexes pulled back in early trading Monday after recording weekly gains, as oil prices and Treasury yields surged.
The blue-chip Dow Jones Industrial Average, benchmark S&P 500, and tech-focused Nasdaq Composite were down 0.6%, 0.6%, and 0.5%, respectively, in recent trading. Energy was the only S&P 500 sector in the green.
Major U.S. stock indexes rose Friday and registered weekly gains, with the Dow snapping a three-week skid, as oil prices and Treasury yields declined.
This week, investors will be focused on the releases of the latest Personal Consumption Expenditures (PCE) data, due Wednesday morning, and the U.S. jobs report for September, slated for Friday morning.
“Stocks are still seeking a path out of their latest consolidation,” Chris Larkin, E*TRADE from Morgan Stanley’s Managing Director, Trading and Investing, said in written commentary. “Tech strength has been doing a lot of the heavy lifting for bulls lately, but the broader market hasn’t been able to gain much traction because of rising yields and oil prices. And with the Fed focused on the inflation side of its mandate, unless this week’s labor market data is a major surprise, it will likely play second fiddle to interest rates and energy.”
Oil prices jumped Monday after President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz for seven days. U.S. benchmark West Texas Intermediate crude futures rose 2% to $94.30 a barrel, while Brent crude futures, the international benchmark, were 1.8% higher at $106.20.
Amid increased expectations of a Federal Reserve interest-rate hike at its late-October meeting, the 10-year Treasury yield—which serves as a benchmark for a wide range of interest rates, including those for mortgages, corporate bonds, and other loans—surged above 5.23%, up seven basis points from Friday’s close and its highest level since 2007. Per CME FedWatch, traders see a 70% likelihood of a Fed rate hike next month, up from 56% one week ago.
Memory stocks and other AI-related companies were among the biggest decliners early Monday. Roundhill’s Memory ETF (DRAM) fell 2.5% and the broader iShares Semiconductor ETF (SOXX) was down less than 1%. Arm Holdings (ARM) and Sandisk (SNDK) were among the biggest Nasdaq decliners.
Most of the Magnificent Seven mega-cap tech stocks were lower, with Meta Platforms (META) shares down 3.5% following a nearly 3.5% drop Friday. The Roundhill Magnificent Seven ETF (MAGS) was down 1%.
Meta poached MongoDB (MDB) CEO and president Chirantan “CJ” Desai to run its new enterprise program, and the data platform company’s shares sank 25%.
