Major U.S. stock indexes ended mixed on Monday, with the S&P 500 down 0.33% and the Dow Jones Industrial Average slipping 0.70%, while the Nasdaq 100 edged up 0.08%. The move reflected a tug-of-war between advancing pockets tied to oil, AI and cybersecurity, and broader pressure from rising Treasury yields amid renewed Middle East tensions that pushed crude oil higher.
Data and market pricing also kept investors focused on the Federal Reserve path: following hawkish comments reported from Fed Chair Warsh last week, traders lifted the probability of a rate hike at the next FOMC meeting. At the same time, earnings momentum remained a supportive factor, with Bloomberg Intelligence tracking strong Q2 growth expectations for the S&P 500.
Key takeaways
- Price move: The S&P 500 fell 0.33% and the Dow dropped 0.70%, while the Nasdaq 100 rose 0.08%.
- Catalyst: Renewed Middle East tensions lifted WTI crude more than 2% and pushed bond yields higher, while Fed-rate expectations also firmed after hawkish remarks.
- Key implication: Higher yields and inflation-linked risk outweighed parts of the earnings tailwind, keeping markets selective by sector.
- What helped: Energy and cybersecurity stocks advanced as crude rallied and investors rotated into pockets of growth.
What drove the move
Monday’s decline in broader indexes was closely tied to a rise in geopolitical risk and its spillover into energy prices. WTI crude climbed more than 2% to a one-week high after the U.S. and Iran exchanged strikes, according to the report. The escalation followed developments described as targeting preparations related to the Strait of Hormuz, with additional reporting that the United Arab Emirates intercepted drones from Iran.
That oil surge fed into expectations for higher inflation and contributed to an increase in Treasury yields. The 10-year Treasury yield rose to a 19-month high, according to the article, reaching 4.77%. With yields moving higher, investors leaned toward sectors less sensitive to funding costs, while more rate-sensitive groups faced pressure.
Equities also had negative carryover from last Friday, when comments attributed to Fed Chair Warsh were reported as reinforcing a less dovish stance on inflation. According to the report, the probability of a Fed interest rate hike at the next FOMC meeting rose to 65% on Monday, up from 36% before he spoke.
Market reaction across sectors and regions
Energy and industrial-linked equities were among the stronger areas. The article said energy producers and service providers moved higher as crude posted gains, including a gain of more than 4% for SLB and increases of more than 2% for ExxonMobil and Devon Energy. In the Dow, Chevron also rose more than 2%, helping offset declines in other components.
In contrast, airlines and housing stocks fell. Airlines and cruise operators dropped as higher fuel costs weighed on profitability expectations, with the article citing multiple declines of more than 2% to 3%. Housing and building suppliers also slid after the 10-year yield moved higher, which the article linked to elevated mortgage-rate expectations.
The Nasdaq’s relative resilience was supported by strength in cybersecurity and some growth-linked names. CrowdStrike shares rose more than 5% after the company announced a strategic partnership with Clear Secure to integrate the CLEAR1 identity platform with the CrowdStrike Falcon platform, according to the report. Other cybersecurity names including Okta, Palo Alto Networks, Zscaler, Fortinet and SentinelOne also gained, helping buoy the Nasdaq 100 despite the higher-rate backdrop.
Outside the U.S., the report described mixed trading: the Euro Stoxx 50 fell 1.01%, China’s Shanghai Composite rose to a one-and-a-half-week high, and Japan’s Nikkei-225 edged down slightly.
Earnings and the rate outlook remain the key balancing factors
While macro pressures drove the index-level weakness, earnings expectations continued to provide support. According to Bloomberg Intelligence, the S&P 500 was tracking for nearly 32% earnings growth in Q2, compared with projections of 23%, and the article attributed much of that optimism to AI-related spending. The report also said that, as of the data cited, 86% of the 486 S&P 500 companies that had reported Q2 results beat estimates.
Still, investors appeared to weigh the Fed question heavily. The article said markets were discounting a 65% chance of a 25-basis-point rate hike at the next FOMC meeting on September 15–16, reinforcing sensitivity to any additional inflation or central-bank messaging.
Rates were not limited to the U.S. The report indicated European government bond yields moved higher as well, with the 10-year German bund yield jumping to a 15-year high, and it noted that markets were pricing a near-certain 25-basis-point rate hike by the ECB at its September 10 meeting.
What to watch next
With crude holding attention and yields still elevated, investors are likely to monitor further developments in the Middle East alongside incoming inflation signals. On the corporate side, the calendar of upcoming earnings—cited in the report for September 1, 2026, including Dell, GitLab, Medtronic, MongoDB, and Palo Alto Networks—could reinforce or challenge the current earnings-growth narrative while the market continues to reprice the path of policy rates.
