Wall Street's recent rally lost steam on Monday, with major indexes closing mixed as a surge in oil prices and a rise in Treasury yields weighed on technology stocks. The S&P 500 slipped 0.1% to 7,403.05, while the Nasdaq Composite dropped 0.5% to 26,090.73. The Dow Jones Industrial Average bucked the trend, adding 159.95 points, or 0.3%, to close at 49,686.12.
The pullback comes just days after the S&P 500 and Nasdaq hit record highs. Investors rotated out of high-growth tech names, with the Philadelphia Semiconductor Index falling 3.3%. Nvidia, a key AI bellwether, dropped 1.4% to $222.32 ahead of its earnings report due Wednesday. Advanced Micro Devices also fell 0.7% to $420.99.
Rising bond yields were a major headwind. The 10-year Treasury yield reached 4.59%, its highest since February 2025. Higher yields reduce the present value of future earnings, making high-priced tech stocks particularly vulnerable. Nathan Peterson, director of derivatives research at the Schwab Center for Financial Research, noted that while higher yields are not necessarily a bull market killer, the speed of the move is critical.
Oil prices added to inflation fears. U.S. crude settled at $107.37 after President Donald Trump paused plans for a strike on Iran to open the door for talks, according to Reuters. The energy sector was the day's standout, with the S&P 500 energy sector gaining 1.8%. Burns McKinney, portfolio manager at NFJ Investment Group, said, "Oil prices were moving markets on a day-to-day basis."
Merger Activity and Earnings in Focus
In corporate news, Dominion Energy shares surged 9.4% to $67.56 after agreeing to an all-stock merger with NextEra Energy. Under the deal, Dominion investors will receive 0.8138 NextEra shares for each share held. NextEra CEO John Ketchum cited surging electricity demand from data centers and grid expansion as a key driver. However, NextEra shares fell 4.6% to $89.04. Reuters valued the deal at $66.8 billion, noting it would create one of the world's largest electric utilities, pending regulatory approval.
Regeneron was the biggest loser, plunging 9.9% to $629.68 after its melanoma therapy failed in a late-stage trial. BMO Capital Markets' Evan Seigerman said "back-to-back key pipeline misses" are pressuring Regeneron's drug development. The trial compared Regeneron's combo therapy against Merck's Keytruda.
Retail Earnings Ahead
Retail earnings could provide the next signal on consumer health. Home Depot traded up 0.9% to $299.81 ahead of its results on Tuesday. Walmart added 1.4% to $133.34 before its report later this week. Barron's described expectations for Home Depot as muted, with higher rates and weak housing still weighing on demand for home improvement projects.
Looking ahead, markets remain cautious but not panicked. The Dow held steady, energy stocks attracted buyers, and big tech took a pause after a strong run. Tuesday's session will likely hinge on oil headlines and bond market movements.
