The S&P 500 Index ($SPX) (SPY) closed down by -0.77% on Monday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -0.67%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -1.08%. December E-mini S&P futures (ESZ26) fell -0.76%, and December E-mini Nasdaq futures (NQZ26) fell -1.07%.
Stock indexes settled lower on Monday amid a surge in bond yields. Stocks fell as bond yields rose amid concerns that the Strait of Hormuz will remain closed for the foreseeable future, keeping oil prices elevated and raising inflation expectations, which could prompt the Fed to keep tightening monetary policy. The 10-year T-note yield soared to a 19-year high of 5.27% on Monday. The jump in bond yields weighed on chipmakers and AI stocks, which weighed on the overall market.
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Crude prices initially rose more than +4% on Monday as hopes faded for an imminent breakthrough to end the war in Iran and reopen the Strait of Hormuz after President Trump rejected Iran’s latest proposals to end the war. However, stock indexes recovered from their worst levels when crude prices gave up nearly all of their gains when CNN reported that President Trump is willing to give Iran sanctions relief in return for concrete progress on the nuclear issue.
Hawkish comments from Fed Governor Lisa Cook signaled she may favor additional Fed rate hikes, saying the recent Fed rate hike was meant to address too-high inflation and that the US labor market seems well positioned to handle higher interest rates.
On the positive side for stocks, the US and China detailed a plan to cut tariffs on about $30 billion of imports from each country. China's Commerce Ministry said Monday that the reductions will take effect once both sides complete procedures required under their domestic laws. Also, Monday’s US economic news supported stocks after the Sep Dallas Fed manufacturing survey fell -1.8 to 9.8, a smaller decline than expectations of 7.8.
Nov WTI crude oil prices (CLX26) settled slightly higher on Monday as hopes faded for an imminent breakthrough in peace talks to end the Iran war. President Trump on Saturday rejected Iran's latest proposal to end the war, and Iran said it will not soften any demands it has made to reopen the Strait of Hormuz. The Wall Street Journal reported that US negotiators are pressing Iran to make concessions on its nuclear program to revive the peace talks and placate President Trump on an issue he has made a top priority. The newspaper also reported that Mr. Trump expects to resume the bombing campaign against Iran after the US midterm elections on November 3. Crude prices also rose after Iran-backed Houthi militants in Yemen launched drone and missile attacks against Saudi Arabia over the weekend.
Markets are discounting a 70% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets settled lower on Monday. The Euro Stoxx 50 closed down -0.02%. China's Shanghai Composite fell to a 1.75-month low and closed down -1.67%. Japan's Nikkei-225 Stock Average fell from a 1.25-month high and closed down -0.73%.
Interest Rates
December 10-year T-notes (ZNZ6) closed down -12 ticks on Monday. The 10-year T-note yield rose +6.9 bp to 5.230%. T-note prices tumbled to a 19-year nearest-futures low on Monday, and the 10-year T-note yield rose to a new 19-year high of 5.272%. T-notes were pressured on Monday after President Trump rejected Iran’s latest peace proposal, which could keep oil prices higher for longer as the Strait of Hormuz remains closed, and could persuade the Fed to keep raising interest rates to contain inflation. Hawkish comments on Monday from Fed Governor Cook also undercut T-notes as she signaled she may favor additional Fed rate increases, saying the US labor market seems well positioned to handle higher interest rates. T-notes recovered from their worst level after crude prices gave up most of an early sharp rally.
European government bond yields moved higher on Monday. The 10-year German bund yield climbed to a 17-year high of 3.654% and finished up +4.2 bp to 3.643%. The 10-year UK gilt yield rose to a 19-year high of 5.437% and finished up +5.6 bp to 5.422%.
Comments from ECB President Christine Lagarde were dovish for ECB policy when she said, “While growth has been resilient, since the last ECB meeting, long-term interest rates have risen notably, which will slow growth and reduce pass-through by more than projected in our September exercise.”
Markets are discounting a 36% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI stocks retreated on Monday as T-note yields soared. The iShares Semiconductor ETF (SOXX) closed down more than -1%. ARM Holdings Plc (ARM) closed down more than -8% to lead losers in the Nasdaq 100, and Qualcomm (QCOM) closed down more than -7%. Also, Intel (INTC) closed down more than -5%, and SanDisk (SNDK), Advanced Micro Devices (AMD), and Marvell Technology (MRVL) closed down more than -3%. In addition, Micron Technology (MU) closed down more than -2%.
Mining stocks fell sharply on Monday as gold and silver prices tumbled to 1.75-month lows. Anglogold Ashanti (AU), Coeur Mining (CDE), and Hecla Mining (HL) closed down more than -6%, and Newmont Corp (NEM) and Barrick Mining (B) closed down more than -4%.
Software stocks were under pressure on Monday and weighed on the broader market. Atlassian Corp (TEAM) closed down more than -4%, and ServiceNow (NOW) and Oracle (ORCL) closed down more than -3%. Salesforce (CRM) and Intuit (INTU) also fell more than 2%, while Autodesk (ADSK), Microsoft (MSFT), Adobe Systems (ADBE), Palantir Technologies (PLTR), and Thomson Reuters (TRI) fell more than -1%.
Cybersecurity stocks rallied on Monday and limited losses in the broader market. Palo Alto Networks (PANW) closed up more than +4% to lead gainers in the S&P 500 and Nasdaq 100. Also, Okta (OKTA) and Zscaler (ZS) closed up more than +3%, and Crowdstrike Holdings (CRWD) closed up more than +2%. In addition, Cloudflare (NET), Fortinet (FTNT), and SentinelOne (S) closed up more than +1%.
Roblox (RBLX) closed down more than -9% after Jeffries downgraded the stock to underperform from hold, with a price target of $38.
Bloom Energy (BE) closed down more than -8% to lead losers in the S&P 500 after Oracle sent a New Mexico data center developer a notice citing force majeure, in an attempt to put off payments if the data center gets derailed.
Boeing (BA) closed down more than -6% to lead losers in the Dow Jones Industrials after the FAA said it is holding off on certification of the company’s new 737 Max 10 jets due to a new software issue, just as the company was in the final stages of winning approval to begin deliveries to airlines.
UiPath (PATH) closed down more than -2% after D.A. Davidson downgraded the stock to underperform from neutral, with a price target of $10.
Snowflake (SNOW) closed down more than -2% after announcing it intends to offer $3.5 billion of convertible senior notes due in 2029 and 2031.
Kodiak Sciences (KOD) closed up more than +178% after saying a Phase-3 study of Zenkuda and tabirafusp-ted met key endpoints in patients with wet age-related macular degeneration.
Netease ADRs (NTES) closed up more than +4% after Morgan Stanley named it a top pick among peers, expecting the company’s new Ananta game to become a blockbuster launch and a core growth driver next year.
Nvidia (NVDA) closed up more than +1% after boosting its share buyback program by $150 billion.
Earnings Reports (9/29/2026)
AAR Corp (AIR), CarMax Inc (KMX), Carnival Corp Ltd (CCL), Concentrix Corp (CNXC), Critical Metals Corp (CRML), Uranium Energy Corp (UEC).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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