- US stocks opened lower due to rising crude oil prices and Treasury yields pressuring equities
- Dow Jones fell 0.69%, Nasdaq declined 0.50%, and S&P 500 dropped 0.48% at market open
- Brent crude rose over 3.7% to above $101 per barrel, WTI crude gained around 4.2% initially
US stocks opened lower on Monday as a sharp rise in crude oil prices and US Treasury yields weighed on investor sentiment, putting pressure on equities at the start of the new trading week. The Dow Jones Industrial Average fell 0.71%, or 366.36 points, to 51,462.26. The Nasdaq Composite declined 1.24%, or 336.90 points, to 26,737.39, while the S&P 500 dropped 0.91%, or 71.11 points, to 7,672.3.
The early weakness comes despite a strong performance on Wall Street last week. The Dow gained 0.3%, snapping a three-week losing streak. The S&P 500 and Nasdaq Composite advanced 1.2% and 2.1%, respectively, with both posting their strongest weekly gains since early August.
Rising crude prices emerged as one of the biggest pressures on US equity futures. Brent crude initially jumped 3.73% to $101.01 a barrel, while West Texas Intermediate futures gained around 4.22% to $96.31. Prices later eased from their highs, with Brent trading more than 2% higher at $106.55 a barrel and WTI gaining around 2% at $94.46.
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The oil market remained in focus after US President Donald Trump rejected conditions for a ceasefire put forward by Iran, raising concerns over the outlook for energy supplies and geopolitical tensions.
Higher oil prices can add to inflationary pressure, potentially complicating the outlook for interest rates and putting additional pressure on companies and consumers.
US Treasury yields also extended last week's sharp moves higher. The benchmark 10-year Treasury yield traded above 5.2%, while the 30-year Treasury yield crossed 5.5%. Both yields were hovering around multi-year highs.
Higher Treasury yields can weigh on equity valuations by increasing borrowing costs and making government bonds relatively more attractive compared with risk assets. Growth and technology stocks can be particularly sensitive to changes in bond yields because a larger portion of their valuations is linked to expected future earnings.
The rise in yields therefore added another source of pressure for the Nasdaq, which had posted a strong 2.1% gain last week.
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