The Nasdaq and the benchmark S&P 500 closed lower on Monday as investors took some profits in technology stocks while surging Treasury yields and high oil prices fuelled concerns that inflation and borrowing costs could stay elevated.

The 10-year Treasury yield, the benchmark for global borrowing costs, climbed to its highest level since February 2025 earlier in the day on worries that high inflation would keep borrowing costs elevated due to the disruption of oil shipping through the Strait of Hormuz.

US crude settled up more than 3 percent after a volatile session. But oil pared gains after settlement and US stocks trimmed losses after US President Donald Trump said he had paused a planned attack against Iran to allow for negotiations to take place on a deal to end the US-Israeli war on Iran, after Iran sent a new peace proposal to Washington. But he added the United States was ready to resume attacks in the absence of a deal.

"It seems like the one issue that's been moving markets on a day-to-day basis is oil prices. The main variable is the blockade on the Strait of Hormuz that pushes oil higher and increases the risk in the longer run of inflation expectations becoming unanchored," said Burns McKinney, portfolio manager at NFJ Investment Group in Dallas, adding that high yields put pressure on long-duration sectors like the technology and "high-flying chip stocks."

Equity investors seem "more optimistic and trusting of the president than bond investors," according to McKinney, who said: "It seems like every other day there might be some rumour of a deal being struck in Iran and stocks rally again. They believe it and they kind of have the rug yanked out from under them because it just continues to be a stalemate."

The Nasdaq fell 0.5 percent, to 26,090, the S&P 500 fell 0.1 percent, to 7,403, while the Dow rose 0.3 percent, to 49,686. (AFP)



Edited by Cecil Wong