Stocks tanked Monday as geopolitical concerns added to inflation concerns and put more pressure on financial conditions, a familiar but nightmarish tale for bullish investors hoping for stock indexes to hold their record levels.After sitting positive for much of Monday fresh off of its worst week of 2024, the S&P 500 turned negative and ended the day down 1.2% at 5,062, its lowest closing price since Feb. 21.
The blue chip Dow Jones Industrial Average and tech-heavy Nasdaq fell 0.7% and 1.8%, respectively, with Salesforce’s 7% loss and Tesla stock’s 6% drop leading the negative charge. The equity selloff came as bond yields sharply increased as the market moved into less risky bets as Israel’sresponse to Iran’s weekend drone strikes underscored escalating violence in the Middle East.
Yields for 10-year U.S. Treasury notes jumped 12 basis points to over 4.6%, their highest level since Nov. 13, and similar rises in short-term government bonds indicate the market’s hopes are fleeting for a near-term reduction in interest rates. Higher yields weigh on stock prices for several reasons, chiefly because they make debt financing more expensive for the many companies who rely on debt offerings to operate, and they make investors more prone to keep their money in bonds, where there is a safer rate of return than in equities.