US stocks plunged on Monday as bond yields surged and investors monitored the aftermath of Iran’s attack on Israel and ongoing corporate earnings releases. The S&P 500 (^GSPC) dipped below the 5,100 mark, ending the day down 1.2%. This two-day decline of 2.6% marks the steepest drop in over a year.
The Dow Jones Industrial Average (^DJI) decreased by 0.7%, while the Nasdaq Composite (^IXIC) fell by 1.8%, with Big Tech stocks driving the downturn. Earlier gains across all three indices were erased during the session. The 10-year Treasury yield (^TNX) reached its highest levels of 2024, hovering around 4.63%, as traders tempered expectations for aggressive Fed interest rate cuts this year.
Recent days have seen stocks facing pressure as the earnings season began with lackluster results, and concerns lingered about inflation remaining below the Federal Reserve’s 2% target.
Initially, investors brushed off fears of a full-scale conflict in the Middle East following Iran’s missile and drone strike on Israel over the weekend. US efforts to dissuade Israel from retaliation seemed to calm nerves, aided by the well-anticipated nature of the attack, which allowed for contained damage.
Oil prices recovered from earlier losses on Monday as the market awaited Israel’s response. West Texas Intermediate crude futures (CL=F) closed above $85 per barrel, while Brent futures (BZ=F) settled just above $90 per barrel.
Goldman Sachs (GS) took center stage in corporate earnings news on Monday, with major banks showing strength. Shares of the Wall Street giant surged over 3% after reporting better-than-expected first-quarter profits. However, Tesla (TSLA) saw its shares drop over 5% after announcing staff reductions amid a broader slowdown in electric vehicle growth.