On Monday, U.S. stocks experienced a downturn as escalating oil prices and rising Treasury yields stoked worries about inflation and increased borrowing costs. The S&P 500 and Nasdaq Composite each declined by 0.6%, while the Dow Jones Industrial Average saw a 0.4% drop.
This slump in the stock market came amid a temporary surge in Brent crude oil prices, which briefly surpassed $100 a barrel before settling around $97.61. The volatility in oil prices is largely attributed to uncertainties surrounding the flow of tankers through the Strait of Hormuz following recent conflicts involving Iran. As a result, there has been a noticeable uptick in U.S. gasoline prices over the past year, further fueling inflationary concerns.
The fear of rising inflation has also driven Treasury yields upwards. The 10-year Treasury yield increased to 5.24% from 5.17%, and the 30-year yield climbed to 5.56%. These higher borrowing costs have the potential to exert pressure on both businesses and consumers, while simultaneously diminishing the attractiveness of stocks and other investments.
Airline stocks were particularly affected by the prospect of higher fuel costs, with American Airlines and United Airlines both recording losses. Additionally, gold-related stocks took a hit as gold prices fell sharply during the trading session.