U.S. stock markets closed lower on Monday following the escalation of geopolitical conflicts in the Middle East. Crude oil prices and the yield on the long-term U.S. government bond spiked. All three major stock indexes ended in negative territory. However, the indexes finished last month in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.7% or 374.09 points to close at 53,185.90. However, 24 components of the 30-stock index ended in negative territory and six ended in positive territory. The tech-heavy Nasdaq Composite finished at 26,370.89, slipping 0.1% on weak performance by technology stocks.
The S&P 500 was down 0.3% to finish at 7,686.14. Six out of 11 sectors of the broad-market index ended in negative territory while five finished in positive territory. The Information Technology Select Sector SPDR (XLK) and the Utilities Select Sector SPDR (XLU) fell 1.6% and 1%, respectively. On the other hand, the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) rose 1.45 and 1.2%, respectively.
The fear gauge CBOE Volatility Index (VIX) rose 3.4% to 14.92. A total of 15.65 billion shares were traded on Monday, higher than the last 20-session average of 15.58 billion. Decliners outnumbered advancers on the NYSE by a 1.95-to-1 ratio. On the Nasdaq, a 1.58-to-1 ratio favored declining issues.
Escalation of U.S.-Iran War
On Aug 30, U.S. Central Command confirmed that U.S. military hit two rocket launchers on Iran’s Larak Island. In retaliation, Iranian state media reported that the Tehran regime attacked U.S. bases in Jordan. This was the first major escalation of military attacks between the two countries since late July.
As a result of this geopolitical conflict, crude oil prices spiked. The price of the U.S. benchmark — the West Texas Intermediate crude oil future — rose 2.83% to settle at $85.76 per barrel. The price of the global benchmark — the Brent crude oil future — rose 2.71% to settle at $90.49 per barrel.
Consequently, stock prices of giant crude oil producers Chevron Corp. CVX and ExxonMobil Holdings Corp. XOM advanced 2.1% and 2.7%, respectively. The two companies currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hike in Long-Term U.S. Bond Yields
The yield on the benchmark 10-Year U.S. Treasury Yield rose 2 basis points to 4.75%, marking its highest level since Jan. 15, 2025. The yield on the long-term 30-Year U.S. Treasury Note rose 3 basis points to 5.243%.
