Stock markets struggling to keep up with rising oil prices and bond yields

The U.S. stock market faced challenges on Monday as rising oil prices and mounting pressure on the bond market threatened to pull it away from its record high. The S&P 500 dropped 0.8% and erased most of its gains from the previous week, while the Dow Jones Industrial Average fell 372 points, or 0.7%, as of 11:45 a.m. Eastern time. The Nasdaq composite also saw a 1% decline.

The majority of the U.S. stock market was weighed down by a 2.8% rise in the most actively traded Brent crude oil contract, which surged to US$100.19 per barrel, overshadowing Nvidia's share price increase following its announcement of a substantial cash buyback. Meanwhile, the Toronto Stock Exchange fell about 0.75%, as commodity-related companies struggled.

Oil prices fluctuated due to uncertainty over the situation in Iran's Strait of Hormuz, where tankers transport oil worldwide. After President Trump rejected Iran's offer to reopen the strait and resume nuclear talks, Brent crude climbed above $101 per barrel before the market opened. However, it retreated as U.S. officials continued negotiations with Iran.

Brent's price remains significantly higher than the $72 it cost before the U.S. and Israel attacked Iran in late February, contributing to inflation and rising gasoline prices.

The concern over inflation led to higher Treasury yields in the bond market, making borrowing more expensive and undermining stocks' value. The 10-year Treasury yield jumped to 5.26% from 5.17%, reaching levels last seen in 2007. Airlines and other fuel-intensive companies, such as American Airlines and United Airlines, saw their stocks decline.

Meanwhile, gold miners suffered due to gold's price drop of 3.9%, as investors seek protection against inflation but find no earnings in gold. Newmont, a Denver-based mining giant, dropped 4.4%, and MongoDB experienced its largest loss of the day, falling 18.5% after its CEO stepped down.

Nvidia, despite its stock buyback program, faced a 18.5% drop after its CEO resigned. The chipmaker's stock has risen significantly due to the demand for its AI technology, but safety concerns have weighed on AI stocks. In other markets, European indexes were mixed, with a 2.7% decline in Seoul and 1.7% in Shanghai.