On Monday, major U.S. stock indexes closed lower, with the S&P 500 falling by 0.77%, the Dow Jones Industrial Average down 0.67%, and the Nasdaq 100 declining by 1.08%. This downward trend was influenced by rising bond yields, with the 10-year T-note reaching a 19-year high of 5.27%, as concerns grew over the potential closure of the Strait of Hormuz and its impact on oil prices and inflation.
Crude oil prices initially surged over 4% before settling slightly higher, amid ongoing geopolitical tensions between the U.S. and Iran, particularly after President Trump rejected Iran’s proposals for peace. The markets are anticipating a 70% likelihood of a 25 basis point increase in the Federal Reserve’s interest rates at the upcoming meeting on October 27-28.
In international markets, the Euro Stoxx 50 closed down 0.02%, China’s Shanghai Composite fell 1.67%, and Japan’s Nikkei 225 dropped 0.73%. European government bond yields also rose, with the 10-year German bund yield reaching a 17-year high of 3.643%.
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