Stocks Slip As Oil Prices Climb, 10-Year Yields Cross 4%; Energy Sector Outperforms: What's Driving Markets Monday?

Wall Street started the week in the red, as traders weighed the economic and geopolitical fallout from escalating tensions in the Middle East.

Monday marked the one-year anniversary of Hamas’ Oct. 7 attack, which triggered the ongoing war in Gaza. The situation is now threatening to spread across the region as Israel considers retaliating for last week’s missile attacks by Iran.

By 1:00 p.m. EST, the major indices were modestly lower, with the S&P 500 down 0.5% and the Dow Jones off by 0.7%. The Nasdaq 100 also slid 0.5%. The energy sector was the only bright spot, buoyed by surging oil prices.

West Texas Intermediate (WTI) crude, as tracked by the United States Oil Fund USO, jumped over 3%, climbing to $77 per barrel. This rally marked its fifth consecutive session of gains, fueled by concerns that Israel may retaliate against Iran, a key oil producer, for its involvement in regional conflicts.

Last week’s blowout U.S. labor market data, coupled with rising oil prices and fresh stimulus measures out of China, pushed 10-year Treasury yields above 4%, setting the stage for the highest levels since late July. Investors appear increasingly wary of long-duration bonds, sending the iShares 20+ Year Treasury Bond ETF TLT down 0.6%, extending its losing streak to four sessions.

Market sentiment around the Federal Reserve’s upcoming policy decisions has also shifted. The probability of the Fed refraining from cutting interest rates next month has dropped to just 17%, according to the CME FedWatch Tool,

Rising yields weighed heavily on metals, with gold down 0.4% to $2,645 per ounce and silver dropping 1.3%. Meanwhile, Bitcoin BTC/USD gained 1.4%, trading at $63,682.

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Monday’s Performance In Major US Indices, ETFs

Major Indices	Price	Chg %
S&P 500	5,724.31	-0.5%
Nasdaq 100	19,930.58	-0.5%
Dow Jones	42,059.07	-0.7%
Russell 2000	2,191.35	-0.8%

According to Benzinga Pro data:

• The SPDR S&P 500 ETF Trust SPY edged down 0.5% to $570.38.
• The SPDR Dow Jones Industrial Average DIA fell 0.7% to $420.90.
• The tech-heavy Invesco QQQ Trust Series QQQ fell 0.5% to $485.21.
• The iShares Russell 2000 ETF IWM tumbled 0.8% to $218.77.
• The Energy Select Sector SPDR Fund XLE outperformed, up 0.8%. The Utilities Select Sector SPDR Fund XLU lagged, down 1.7%.

Monday’s Stock Movers

• Super Micro Computer Inc. SMCI rallied 14% after the company announced that it is currently shipping more than 100,000 graphics processors per quarter and unveiled a new suite of liquid cooling products.
• Everest Group Ltd. EG plummeted over 8% after Morgan Stanley lowered its price target from $450 to $430.
• Constellation Brands Inc. STZ fell nearly 2% after Bank of America downgraded the stock from Outperform to Neutral and lowered the price target from $300 to $255.
• Bank of America also downgraded several healthcare stocks including Concentra Group Holding Parent Inc. CON, down 4.6%, AMN Healthcare Services Inc. AMN, down 1.9%, Brookdale Senior Living BKD, down 6%, and U.S. Physical Therapy Inc. USPH, down 2.5%.

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Image created using artificial intelligence via Midjourney.