NASDAQ falls 0.6% as Treasury yields, oil prices rise and AI slowdown talk weighs on tech

All three major US stock indexes fell Monday as Treasury yields and global oil prices rose in tandem.

The Dow Jones Industrial Average closed down 152.09 points, or 0.29 percent, at 52,421.20.

The S&P 500 shed 37.00 points, or 0.48 percent, to finish at 7,619.98, while the tech-heavy NASDAQ Composite dropped 146.62 points, or 0.56 percent, to close at 26,186.41.

Financial markets were volatile from the opening bell.

The yield on the 10-year US Treasury note — a global benchmark and closely watched psychological threshold — surged as high as 5.012 percent intraday, breaching the 5 percent level.

It was the first time the 10-year yield had topped 5 percent since October 2023, when it briefly crossed that level for the first time since 2007.

By 3 p.m., the yield had pared its gains to stand 1.4 basis points above the previous session at 4.960 percent.

Oil prices also extended their rally on growing supply concerns after Saudi Arabia shut a key pipeline.

Brent crude futures for November delivery settled up 1.02 percent at $105.68 a barrel, while West Texas Intermediate futures for October delivery rose 1.34 percent to $101.39 a barrel.

Prices gave back some of those gains, however, after President Donald Trump posted on Truth Social that Iran "wants to make a deal, quickly and desperately."

The simultaneous rise in Treasury yields and oil prices stoked inflation fears ahead of the Federal Reserve's Federal Open Market Committee meeting scheduled for Tuesday and Wednesday.

As expectations spread that the Fed would raise its benchmark interest rate to curb inflation, the probability of a 0.25 percentage point hike at this week's FOMC meeting climbed to 94.5 percent in fed funds futures markets by Monday afternoon.

The technology selloff broadened as AI industry leaders called for a slowdown in the pace of technology development.

Nvidia fell 3.36 percent, Broadcom dropped 4.77 percent, AMD lost 4.40 percent and Intel slid 5.59 percent.

David Wagner of Aptus Capital said markets were "entering a seasonally weak period," adding that "a lot of the rhetoric around AI deceleration and the midterm elections could combine to create an environment where the stock market continues to catch its breath."