GLOBAL MARKETS-Stocks fall, squeezed by rising oil prices and Treasury yields

Major stock ‌indexes fell ​on Monday, as oil resumed its rise after US-Iranian talks reached a stalemate, while Treasury yields extended their recent rise ahead of more expected interest-rate hikes from the Fed in coming months. The Nasdaq led Wall Street lower, even as shares of Nvidia rose after the chipmaker boosted its share buyback authorization by a ‌record $150 billion, eclipsing Apple's $110 billion plan it set out in 2024. Nvidia was up about 2%, off earlier highs.

Gold prices fell as rising oil prices stoked inflation concerns. Spot gold was down 3.9% at $4,119.55 an ounce. Over the weekend, US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz and said talks would continue this week, though there has been little progress towards ending the now seven-month old conflict. ‌Iran has shown little sign of changing its proposals.

U.S. crude rose 3.5% to $95.60 a barrel and Brent rose to $107.86 per barrel, up 3.4%. Markets now imply a roughly 70% chance the Fed will hike ‌for a second straight meeting in October, according to CME FedWatch. The Fed raised rates earlier this month for the first time since 2023 in an effort to combat higher inflation.

"Right now the market narrative is about higher yields for longer and that is putting pressure on equities. I wouldn't advise anybody to panic... but it's certainly worth keeping an eye on," said Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut. "You've got to look at economic data. You've got to look ⁠at the unemployment picture. ​You've got to look at corporate earnings. And as ⁠long as those stay robust, current yields shouldn't be overly disruptive."

With US growth and corporate earnings booming, Wall Street and Main Street have broadly been able to digest the rise in yields and a higher oil price, for now. The Dow Jones Industrial Average ⁠fell 401.54 points, or 0.78%, to 51,426.18, the S&P 500 fell 69.86 points, or 0.91%, to 7,673.11 and the Nasdaq Composite fell 305.53 points, or 1.13%, to 26,763.19. However, the increasing cost of capital is emerging as a key risk to ​AI-linked companies, particularly the so-called hyperscalers, whose billions of dollars in borrowing and spending have powered stock markets everywhere.

Higher oil prices lifted yields further on Monday. Yields on 30-year Treasury bonds hit ⁠their highest levels since mid-May 2004, while 10-year Treasury yields touched their highest since mid-June 2007 before paring gains. Two-year Treasury yields, which are the most responsive to shifts in expectations for rates and inflation, have shot up 56 basis points so far in September, their ⁠largest monthly ​rise since February 2023, in anticipation of more Fed hikes.

This rise has narrowed the discount of 2-year yields to benchmark 10-year yields to around 31 bps from around 40 bps a month ago, a dynamic known as a flattening of the yield curve. The yield on benchmark US 10-year notes was up 8.25 bps at 5.26% while the 30-year bond yield was up 7.4 basis points at 5.576%.

MSCI's gauge of ⁠stocks across the globe fell 9.57 points, or 0.83%, to 1,138.66. The pan-European STOXX 600 index rose 0.21%. KEY US DATA THIS WEEK

This week's scheduled release of September US payrolls report and the monthly personal ⁠consumption expenditures price index (PCE) will offer more insight into the ⁠trajectory for the job market and inflation. The recent spate of upbeat figures has boosted the US dollar, with the euro down 0.25% at $1.1363.

Against the Japanese yen, the dollar strengthened 0.18% to 157.54. Earlier, Japan's top currency diplomat Atsushi Mimura, in an interview with Reuters, issued another warning to any would-be sellers over excessive ‌weakness in the currency.