U.S. stocks closed lower on Monday as rising oil prices and higher Treasury yields pressured sentiment. The S&P 500 and Dow led the declines, while chip and AI-linked shares limited losses on the Nasdaq. Investors now turn to a busy week of retail earnings and the Fed's July meeting minutes.
The Dow Jones Industrial Average fell 272.03 points, or 0.51%, to 53,465.36, and the S&P 500 dropped 40.37 points, or 0.52%, to 7,745.38. The Nasdaq Composite lost 84.25 points, or 0.32%, to 26,644.91, while the Nasdaq 100 slipped a smaller 0.17%. The decline followed the S&P 500's record high last week, leaving the market open to profit-taking.
Oil Jump Lifts Energy, Pressures the Rest
WTI crude climbed more than 2% as concerns over the Strait of Hormuz and stalled U.S.-Iran negotiations kept supply risks in focus. U.S. crude settled 2.74% higher at $84.66 a barrel, and Brent rose 2.59% to $90.81. The rally helped the S&P energy sector rise 0.87%, the only one of the index's components to gain on the day. Communication services fell 1.47%, consumer staples dropped 1.46%, and financials declined 1.04%.
Chip and AI-related stocks helped cushion the Nasdaq's losses. Sandisk gained an additional 8.88%, extending a run that has taken the stock up 35% since last Thursday's investor day. Credo Technology rose 8.87%, Coherent gained 7.79%, and Applied Materials climbed 5.55%. Elsewhere, Microsoft and Meta Platforms were the S&P 500's biggest drags, each declining more than 3%.
Yields Climb to the Highest Since 2007
The 10-year Treasury yield rose to 4.72%, up 3.1 basis points, while the 30-year yield climbed to 5.31%, up 4.8 basis points and its highest level since June 2007. Higher oil prices and stronger New York manufacturing data added to the upward pressure on yields. Concerns over the U.S. fiscal trajectory, combined with heavy AI-related corporate debt issuance, also pushed long-dated yields to their highest since 2007.
At the same time, an unexpected drop in retail sales last month sent the dollar to a two-month low against the euro, as markets scaled back bets on an imminent Fed rate move. Phil Blancato, chief market strategist at Osaic Wealth, pointed to "a combination of summer doldrums and waiting for data on the consumer" as investors stayed cautious.
Retail Earnings and Fed Minutes Ahead
Attention now shifts to a heavy week of retail earnings, with Home Depot, Walmart, Target and Lowe's among the companies reporting results that should offer another read on consumer spending. Traders will also watch the Federal Reserve's July meeting minutes, due Wednesday, for further clues on the path of rates.
Sources: Investing Live, Investing.com, Investing.com
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