Stocks Slip as Oil and Yields Keep Risk Appetite in Check

Stocks began a busy earnings week mostly lower as investors weighed elevated oil prices, rising Treasury yields, and mixed signals around U.S.-Iran negotiations. The S&P 500 nearly erased its losses late in the session after Trump said planned military action against Iran had been called off amid “serious negotiations,” but risk appetite remained cautious. Energy prices stayed high, bond yields hovered near recent peaks, and crypto weakened as investors waited for clearer direction from geopolitics, rates, and major tech earnings.

Key Headlines & Market Movers:

• Oil and Geopolitics Drive Volatility: Crude prices extended Friday’s surge as tensions around Iran and the Strait of Hormuz kept supply concerns front and center. Prices pared some gains after Trump signaled a pause in planned military action, but Brent still settled around $112, underscoring how fragile the energy outlook remains. Strategists warned that a prolonged disruption in Hormuz could keep oil elevated, adding pressure to inflation expectations and interest rates.
• Treasury Yields Test Equity Resilience: The 10-year Treasury yield held near 4.6% after Friday’s sharp jump, keeping pressure on growth stocks and broader valuations. Higher long-end rates are again creating competition for equities, especially after strong fund flows helped push stocks to recent highs. Market strategists flagged the risk that stocks could become more vulnerable if bond volatility remains elevated.

Corporate Moves Highlight AI, Utilities, and Health Care: Nvidia slipped ahead of its highly anticipated earnings report, while memory-chip stocks sold off sharply as investors took profits in parts of the AI trade. Dominion Energy surged after agreeing to be acquired by NextEra in a $67 billion utility deal tied partly to rising power demand from AI infrastructure, while NextEra fell. In health care, Regeneron dropped after a melanoma trial setback, and UnitedHealth edged lower after Berkshire exited its stake.

S&P 500 Sector Performance

Looking Ahead

Markets will likely stay focused on whether oil prices and Treasury yields stabilize, as both are key to restoring confidence in equities. Nvidia’s earnings on Wednesday will be a major test for the AI trade, while investors will also watch for signs that geopolitical risks are easing and that inflation pressures are not reaccelerating. A calmer backdrop in energy and rates would help broaden market participation, but continued stress in either could keep risk assets volatile.

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