Concerns over inflation and rising borrowing costs sent U.S. stocks lower on Monday, as oil prices and Treasury yields climbed. The S&P 500 dropped by 0.6%, the Dow Jones Industrial Average slipped 0.4%, and the Nasdaq Composite decreased by 0.6%.
The downward trend in stocks followed a brief surge in Brent crude prices, which exceeded $100 a barrel before settling around $97.61. The volatility in oil prices is largely attributed to uncertainties regarding the passage of tankers through the Strait of Hormuz amid tensions involving Iran. This situation has exacerbated worries about inflation, as U.S. gasoline prices have also risen significantly over the past year.
The heightened inflation concerns have led to an increase in Treasury yields. The 10-year Treasury yield rose to 5.24% from 5.17%, and the 30-year yield climbed to 5.56%. Higher yields typically translate to increased borrowing costs, which can negatively impact both businesses and consumers while making stocks and other investments less attractive.
Airline stocks were among those hit hardest, as investors evaluated the implications of rising fuel costs. Both American Airlines and United Airlines experienced losses during the trading session. Additionally, gold-related stocks declined as gold prices saw a sharp drop.