US stocks closed lower on Monday as the Nasdaq Composite declined 0.51% to 26,090.73 points, marking its second consecutive session of losses. The S&P 500 lost 5.45 points (0.07%) to 7,403.05 and the Dow Jones Industrial Average rose 159.95 points (0.32%) to 49,686.12. According to Reuters, the technology-heavy Nasdaq's decline was attributed to profit booking and rising Treasury yields, while the Dow's modest gains helped offset broader market weakness. As per Reuters, the S&P 500 and Nasdaq were on track for their second straight day of declines as investors took a break from a rally that started in late March, with the S&P having closed Thursday's session up more than 18% from its March 30 finish.
The 10-year Treasury yield climbed to its highest level since February 2025, reaching 4.63% during the session, driven by continued concerns about oil supply disruptions. As reported by Reuters, U.S. crude settled up more than 3% after a volatile session, but oil pared gains after settlement following President Trump's announcement that he had paused a planned attack against Iran to allow for negotiations on a deal to end the U.S.-Israeli war with Iran, after Iran sent a new peace proposal to Washington. The bond-market selloff was fueled by spiking oil prices, which have stoked concerns of inflation potentially keeping borrowing costs elevated as efforts to end the Iran war appeared to stall. According to Reuters, traders are pricing in a 36.7% chance that the U.S. Federal Reserve will raise interest rates by 25 basis points by year-end, after last week's hotter-than-expected inflation readings. Market analysts note that "the main variable is the blockade on the Strait of Hormuz that pushes oil higher and increases the risk in the longer run of inflation expectations becoming unanchored," as stated by Burns McKinney, portfolio manager at NFJ Investment Group.
Energy emerged as the biggest sector gainer, adding 1.8% during the session, while the information technology sector led declines among the S&P 500's 11 major industry sectors. According to Reuters, the heavyweight information technology sector fell 0.97% and led declines, with chip stocks being among the biggest drags. The Philadelphia SE Semiconductor Index finished down 3.3%, with the chipmaker being the S&P 500's biggest index-point drag, falling 1.3% on Monday. Advancing issues outnumbered decliners by a 1.09-to-1 ratio on the NYSE, with 167 new highs and 152 new lows, while on the Nasdaq, 2,238 stocks rose and 2,637 fell as declining issues outnumbered advancers by a 1.18-to-1 ratio. The S&P 500 posted 21 new 52-week highs and 13 new lows, with ServiceNow leading the S&P 500 gains at 9.6% after BofA Global Research reinstated coverage with a "buy" rating.
Nvidia, the world's most valuable company, is scheduled to report results on Wednesday, with expectations running high after the company's shares have risen 36% from a March low. The Philadelphia SE Semiconductor Index has surged more than 60% this year on strong demand for AI-related chips. Walmart, the world's largest retailer, is also expected to report earnings this week, which could provide insights into how U.S. consumers are coping with high energy prices and broader inflation. Walmart shares rose 1.4% on Monday ahead of its earnings announcement. Dominion Energy shares jumped 9.4% after power firm NextEra Energy announced an all-stock deal valued at about $66.8 billion to acquire the utility, creating the world's largest regulated electric utility by market value, with NextEra's shares falling 4.6%. Regeneron tumbled 9.8% as the drugmaker's experimental treatment missed the main goal in a late-stage trial in patients with advanced melanoma.
The Nasdaq's decline represents a pause in a rally that began in late March, with the index having gained 28% in the same timeframe as enthusiasm about artificial intelligence and solid technology earnings helped investors look past inflationary threats. According to Reuters, there's concern about the rapid rally and some profit taking among investors. "There's concern about the rally we've had in a short period of time, and there's some profit taking," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder, while noting that high yields put pressure on long-duration sectors like the technology and "high-flying chip stocks." The S&P 500 has closed Thursday's session up more than 18% from its March 30 finish, which was its lowest close since the Iran war began in late February. However, Ghriskey said these issues were not new and he did not see a fundamental reason for the rally or the profit taking, suggesting that "a lot of investors are lemmings. They see the weakness and pile on."
