U.S. stocks opened with mixed performance on Monday evening, Beijing time. Traders are closely monitoring oil prices and bond yields while awaiting further developments in Middle East conflicts. A busy earnings season kicks off this week, led by Nvidia's report alongside numerous other companies.
The Dow Jones Industrial Average fell by 26.65 points, or 0.05%, to 49,499.52. The S&P 500 Index rose by 11.27 points, or 0.15%, to 7,419.77. The Nasdaq Composite Index gained 44.22 points, or 0.17%, to 26,269.36.
Beyond tech giants, retail leaders Target and Walmart are also scheduled to report earnings. The market is focused on whether Nvidia's results can sustain the current AI-driven rally while closely tracking consumer demand performance among retailers amid an inflationary environment. The combined effect of geopolitical risks and the earnings season is making investor sentiment more cautious.
Oil prices climbed due to escalating tensions between the U.S. and Iran. West Texas Intermediate crude futures traded above $105 per barrel, while Brent crude futures traded above $109 per barrel.
U.S. stocks are currently in a sensitive period. The S&P 500 and Nasdaq hit record highs last week, and the Dow Jones Industrial Average briefly reclaimed the 50,000-point level.
However, major indices faced setbacks on Friday as global sovereign bond yields rose. The yield on the U.S. 30-year Treasury note reached its highest level in about a year. The yield on the UK 30-year gilt climbed to a level not seen since the late 1990s, while Japanese long-term bond yields also moved higher.
Rising energy prices have amplified inflation concerns, leading to a significant surge in global benchmark government bond yields.
Asset management firm abrdn noted a clear increase in the risk premium for UK gilts. The yield on the U.S. 30-year Treasury touched a one-year high, with German and Japanese government bond yields also rising in tandem. The market is reassessing the monetary policy paths of major central banks, with traders increasingly betting that interest rates will remain elevated for a longer period.
Turbulence in the bond market has begun to spill over into equities, particularly pressuring interest-rate-sensitive growth and technology stocks. Analysts warn that if yields continue to climb, it could further dampen corporate financing activities and consumer spending.
Technology stocks, which previously led the market to new highs, were hit hardest by the surge in yields. The Nasdaq 100 Index fell 1.5% on Friday, marking its worst single-day performance since March 27.
Tensions between Iran and the U.S. remain elevated, with an uncertain conflict outlook keeping oil prices under sustained pressure at high levels. On Sunday, U.S. President Trump stated that Iran must "take action," otherwise "there will be nothing left." Peace talks between the two countries are at an impasse.
Additionally, new inflation data released last week has made a near-term Federal Reserve rate cut appear increasingly unlikely.
Ed Yardeni, President of Yardeni Research, stated: "Financial markets are anticipating that interest rates will stay higher for longer, even though President Trump has called on new Fed Chair Kevin Warsh to lower rates. But the macro backdrop no longer supports an easing bias, let alone rate cuts."
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