NEW YORK — U.S. stocks reversed course on Monday, ending the session in negative territory as an early boost from geopolitical optimism was overtaken by renewed fears of persistent inflation.
The Nasdaq Composite led the afternoon decline, falling 0.73% to close at 21,718.66, according to CNBC. The S&P 500 slipped 0.38% to 6,557.85, while the Dow Jones Industrial Average shed 220 points, or 0.44%, to finish at 50,223.11.
The market’s reversal followed the release of a stronger-than-expected ISM Services report, which showed service-sector inflation hitting its highest level in nearly four years. The data prompted a spike in the 10-year Treasury yield, as investors bet that the Federal Reserve will maintain higher interest rates for longer to combat “sticky” prices.
“The morning’s ‘peace rally’ was quickly dismantled by the reality of the domestic economy,” noted a senior market analyst on CNBC’s ‘Closing Bell’. “Between the energy shock from the Middle East and today’s services data, the path for a Fed rate cut in 2026 is becoming increasingly narrow.”
Geopolitical tensions remained a significant overhang. While reports of a potential Pakistani-brokered ceasefire briefly lifted sentiment in early trading, the market turned cautious ahead of Tuesday’s deadline for Iran to reopen the Strait of Hormuz. Brent crude oil prices remained elevated, settling near $110 per barrel, according to Trading Economics.
In individual stocks, Tesla (TSLA) shares fell 2.1% as investors fretted over consumer demand, while defense firm Kratos Defense (KTOS) surged 9.9% following strong quarterly results and increased demand for autonomous systems.
