S&P 500, Nasdaq Slip as Oil Fears Lift Yields to 2025 High
SkimNews Take
Rising Treasury yields, often a sign of economic confidence, are paradoxically dampening the market as they make equities less attractive by comparison, especially for growth-dependent tech stocks.
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- S&P 500 and Nasdaq slipped 0.07% and 0.51% respectively, while the Dow rose 0.32%, as the Philadelphia Semiconductor Index plunged 3.3% on profit-taking in tech after a rally that had pushed the S&P up 18% from its March 30 low
- 10-year Treasury yield climbed to its highest level since February 2025, with NFJ's Burns McKinney noting bond investors are far less optimistic about US-Iran negotiations than equity investors who 'have the rug yanked out' repeatedly
- US crude settled up more than 3% on worries about oil shipping through the Strait of Hormuz, though it pared gains after Trump said he paused a planned attack on Iran to allow negotiations on a peace proposal
- Nvidia fell 1.3% as the S&P 500's biggest drag ahead of its Wednesday earnings report, with traders also watching Walmart's results this week for a read on consumer spending amid high energy prices
- Dominion Energy shares surged 9.4% after NextEra Energy announced a $66.8 billion all-stock acquisition; NextEra fell 4.6%, and Regeneron tumbled 9.8% after its skin cancer drug combo missed the main goal in a late-stage melanoma trial
- Traders are pricing in a 36.7% chance the Federal Reserve raises rates by 25 basis points by year-end, per CME's FedWatch tool, after last week's hotter-than-expected inflation readings
Why it matters: Bond and equity investors are sharply split: the 10-year yield hitting a level not seen since February 2025 and a 36.7% implied odds of a Fed rate hike by year-end show the bond market doesn't believe Trump's Iran de-escalation will stick, and with Nvidia's Wednesday report looming, a 3.3% chip selloff signals Wall Street is hedging its AI-driven rally.
