On Monday, the Dow Jones Industrial Average (DJIA) fell 0.94%, shedding 398 points and marking its worst day since September 5. This decline was fueled by escalating geopolitical tensions, which pushed oil prices higher, raising concerns among investors about the future of industrial companies, with many opted to exit the market to avoid potential losses.
West Texas Intermediate (WTI) crude, the U.S. oil benchmark, saw a big jump, surging 3.9% to $77.31 per barrel, the highest price since August 30. This sharp increase is attributed to growing tension between Iran and Israel, which has added hard pressure on global oil markets.
In addition to rising oil prices, U.S. Treasury yields also climbed. The 10-year Treasury note yield hit 4.03%, crossing the 4% threshold for the first time since August 8. The rise in yields came as a surprise to many, given expectations that the Federal Reserve would continue to lower interest rates following a 50-basis point cut on September 18. Higher bond yields typically reflect investor concerns about the cost of borrowing, which could impact profit margins for businesses.
Together, these factors have created an atmosphere of caution in the market, with investors wary of the rising costs of doing business.
