The S&P 500 and Nasdaq Composite fell on Monday, led by losses in the technology sector, as traders watched oil prices and bond yields as they awaited further developments on the Middle East conflict.
The broad market index fell 0.7%, while the technology-advanced Nasdaq fell 1.2%. The Dow Jones Industrial Average traded down 131 points, or 0.3%.
Seagate led the selloff in memory chips after the CEO said during a JPMorgan conference call that the new factories “will take too long.” Seagate fell 10% and dragged down competitor Micron Technology by 8%. The comment exacerbated concerns that the memory chip industry does not have the capacity to meet rising demand.
Along with Seagate and Micron, shares of Western Digital and Sandisk fell 8%. In addition, other AI-related stocks such as Nvidia and Broadcom lost 2% and 1%, respectively.
Meanwhile, oil prices were higher. West Texas Intermediate crude futures rose 3% to trade above $109 a barrel, while Brent crude rose 3% to around $112 a barrel.
The moves come at a sensitive time for stocks. The S&P 500 and Nasdaq hit new record highs last week, while the Dow briefly returned to the 50,000 level, SEEbiz reports.
However, the main stock average suffered losses on Friday as government bond yields rose around the world. The yield on 30-year US Treasuries hit the highest level in about a year. It was little changed last time, with the yield on 10-year government bonds.
In the United Kingdom, the yield on 30-year government bonds rose to levels not seen since the late 1990s, along with long-term Japanese bond yields.
Technology stocks, which had led the market to record highs, were hit by a sharp rise in yields. The Nasdaq-100 fell 1.5% on Friday, its worst one-day performance since March 27.
Tensions between Iran and the US remain high, keeping oil prices elevated as the path forward for the conflict remains unclear. On Sunday, President Donald Trump said Iran must “move” or “there will be nothing left.” Peace talks between the two countries have stalled, with Axios reporting that Iran has sent an updated peace proposal, but the US still considers it inadequate for a deal.
In addition, new inflation data released last week makes interest rate cuts by the Federal Reserve unlikely any time soon.
“There are really inflationary issues,” Ben Fulton, CEO of WEBs Investments, told CNBC, calling higher oil prices a “tipping point.” “It’s going to be hard to see that made up.”
That means stocks could be in a “large trading range” from now on without positive developments from the Middle East, particularly on the Strait of Hormuz, he said.
“I can imagine people starting to protect profits pretty quickly,” Fulton added.
