U.S. stocks experienced a decline on Monday as rising oil prices and increasing Treasury yields heightened concerns about inflation and borrowing costs. The S&P 500 dropped by 0.6%, the Dow Jones Industrial Average decreased by 0.4%, and the Nasdaq Composite fell by 0.6%. This downturn occurred after Brent crude oil prices briefly surpassed $100 per barrel before settling around $97.61.
The volatility in oil prices is largely attributed to the uncertainty surrounding tanker movements through the Strait of Hormuz amid ongoing conflicts involving Iran. The increase in energy prices has fueled worries about inflation, with U.S. gasoline prices seeing a significant rise over the past year.
As inflation concerns mounted, Treasury yields also climbed. The yield on the 10-year Treasury note rose to 5.24% from a previous 5.17%, while the 30-year yield increased to 5.56%. These higher borrowing costs potentially exert pressure on both businesses and consumers while making stocks and other investments less attractive.
The impact of rising fuel costs was notably felt in the airline sector, where shares declined as investors evaluated the implications. Both American Airlines and United Airlines recorded losses during the session.
Additionally, stocks related to the gold sector weakened as gold prices experienced a sharp decline during the day’s trading.