Bond yields crank higher and pull stocks further from their record
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- Treasury yields climbed to levels last seen around 2004 and 2007, pushing the Standard & Poor’s 500 index down 0.8% and further from its record high.
- Inflation concerns, federal borrowing and a resilient economy are driving yields higher, while uncertainty over the Iran war and Strait of Hormuz kept oil prices elevated.
- Higher fuel costs weighed on airlines, and falling gold prices hurt miners; Nvidia rose after approving an additional $150 billion in stock buybacks, while Asian markets slid.
Yields in the U.S. bond market cranked higher Monday and again touched their highest levels in roughly two decades, which knocked U.S. stocks further from their record high.
The Standard & Poor’s 500 index fell 0.8% and gave back much of its gain from last week, which had brought it to the brink of its all-time high. The Dow Jones industrial average dropped 347 points, or 0.7%, and the Nasdaq composite sank 0.9%.
Stocks felt pressure as the yield on the 10-year Treasury briefly topped 5.27% before pulling back to 5.23%, up from 5.17% late Friday. It’s back to where it was in 2007, before the financial crisis and Great Recession sent yields toward zero.
The 30-year Treasury yield rose to 5.55% from 5.49% and is back to where it was in 2004.
Treasury yields have been rising for various reasons, including inflation worries, Washington’s massive debt load and signs that the U.S. economy remains solid despite its many challenges. That pressures the economy because higher yields make borrowing money more expensive for everyone, while also undercutting prices for stocks and other investments.
Monday’s rise in yields followed the latest swings in oil prices, which have been yo-yoing on uncertainty about when the war with Iran will allow tankers to travel freely again through the Strait of Hormuz. That would allow them to deliver oil from the Middle East to customers worldwide.
The latest turns came after President Trump said over the weekend that he’s rejecting an offer from Iran to reopen the Strait of Hormuz and resume talks on its nuclear program.
“I’d like to make a deal too,” Trump said Saturday. “But that deal would not be acceptable.”
The price for Brent crude in the most actively traded part of the oil market briefly climbed above $101 per barrel Monday morning, but it pared its gains as U.S. officials said mediators were still working with Iran and the United States on a deal to end the fighting and open the strait. It settled at $97.83, up 0.4%.
For all its ups and downs, a barrel of Brent remains much more expensive than the roughly $72 it cost before the United States and Israel attacked Iran in late February. That has helped worsen inflation, and the average price for a gallon of regular gasoline is up to nearly $4.48 from $3.13 a year ago, according to AAA.
On Wall Street, stocks of airlines and other companies with big fuel bills sank because of the rise in oil prices.
American Airlines fell 2.5%, and United Airlines lost 2.2%.
Gold miners were also weak after the price of gold sank 3.5%. Gold has a reputation for helping to protect its investors from high inflation, but its price tends to weaken when rising yields mean bonds are paying investors more in interest. Gold struggles to keep up because it pays its investors nothing.
Newmont, the Denver-based mining giant, slid 4.4%.
One of Wall Street’s bigger losses hit MongoDB, which dropped 18.5% after the database company said its chief executive, Chirantan “CJ” Desai, is stepping down immediately to pursue a senior role at Meta Platforms.
Such losses more than offset a 1.7% rise for Nvidia, Wall Street’s most influential stock.
The chip company’s stock climbed after it said its board approved a plan to send up to an additional $150 billion to its shareholders in a stock buyback plan, bringing the program’s total remaining size to $235 billion.
Nvidia has the power to do so after the frenzy around its chips used for artificial-intelligence technology helped it more than double the amount of cash on its books in the first half of its fiscal year. The company also on Monday unveiled a new security platform that the chipmaker said can stop AI agents from going rogue.
AI stocks have broadly come under pressure after leaders of the industry said it needs to slow its development to give safety measures time to catch up.
All told, the S&P 500 fell 59.72 points to 7,683.69. The Dow dropped 347.11 points to 51,481.51, and Nasdaq sank 248.34 points to 26,820.38.
In stock markets abroad, European indexes were mixed after weaker performances across much of Asia.
Indexes dropped 2.7% in Seoul and 1.7% in Shanghai for two of the world’s bigger moves.
Choe writes for the Associated Press.
