Stocks on Wall Street were mixed on Monday while oil prices tumbled and Treasury yields dropped after the United States and Iran paused strikes over the weekend, halting two weeks of attacks.

The news raised hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume through the Strait of Hormuz. Investors remained cautious, however, as tensions remained high.

US President Donald Trump said on Monday the United States was having "good talks" with Iran, and there was a chance of a deal over their conflict, but added that US strikes would resume if the negotiations failed to deliver.

"What markets are struggling to digest is we're in the consistent kind of back and forth where it seems like, again, Donald Trump is showing his ability to control sentiment despite investors really not having a viable off-ramp or an end to the war and durably lower oil prices," said Jeff Klingelhofer, managing director at Aristotle Pacific Capital in Newport Beach, California.

Central bank interest rate decisions and key tech company earnings due this week were also keeping some investors on the sidelines.

US crude fell 8.2 percent to US$81.98 a barrel, and Brent fell to US$87.77 per barrel, down 9.31 percent on the day. The yield on benchmark US 10-year notes fell 3.03 basis points to 4.65 percent, from 4.68 percent late on Friday.

The Dow Jones Industrial Average was the best-performing major US stock index, rising 262 points, or 0.5 percent, to 52,210, the S&P 500 rose 1 point, or 0.02 percent, to 7,413.22, and the Nasdaq Composite fell 43 points, or 0.2 percent, to 24,932.

The US Federal Reserve is expected to hold rates steady when its two-day meeting concludes on Wednesday, though traders see a risk of a hike. Fed expectations have been whipsawed after the recent uptick in oil prices reignited inflation fears.

Fed Chairman Kevin Warsh's preference for less forward guidance is adding to the uncertainty over whether the central bank will raise rates. Fed funds futures traders are currently pricing in 38 percent odds of a hike on Wednesday and an 83 percent probability of an increase by September.

"A hold is the most likely outcome, though a few dissenting votes in favour of a hike are possible," Edward Jones senior analyst Brian Therien said in a note.

Investors are also watching corporate earnings, with roughly one-third of S&P 500 companies due to report this week. Results from "Magnificent Seven" members Microsoft, Amazon.com, Meta and Apple will be seen as a key test of the AI trade.

Negative cash-flow reports from Alphabet and Tesla last week added to concerns about debt-fuelled corporate spending, while Chinese chipmaker CXMT's strong stock market debut signalled intensifying competition for the US semiconductor industry. (Reuters)



Edited by Cecil Wong