US stocks experienced a downturn on Monday amid rising oil prices and increased Treasury yields, heightening concerns about inflation and borrowing costs. The S&P 500 fell by 0.6%, the Dow Jones Industrial Average dropped 0.4%, and the Nasdaq Composite also declined by 0.6%. This market shift came as Brent crude oil briefly surged above $100 a barrel before settling around $97.61.
The volatility in oil prices is attributed to uncertainties surrounding the passage of tankers through the Strait of Hormuz due to ongoing conflict involving Iran. This instability in energy markets has fueled inflation worries, with US gasoline prices having seen a substantial increase over the past year.
These inflation concerns have subsequently led to a rise in Treasury yields. The 10-year Treasury yield climbed to 5.24% from 5.17%, while the 30-year yield rose to 5.56%. Such increases in borrowing costs can exert pressure on businesses and consumers, potentially diminishing the attractiveness of stocks and other investments.
Among sectors feeling the impact, airline stocks took a hit as investors evaluated the effect of higher fuel costs. Notably, shares in American Airlines and United Airlines recorded losses. Additionally, the session saw gold-related stocks weaken due to a sharp decline in gold prices.