Stocks Fade Late as Rising Yields and Oil Prices Offset Semiconductor Rebound

Stocks surrendered most of their early gains on Monday as a late-session pullback in semiconductor shares, combined with rising Treasury yields and higher oil prices, pushed the major averages into negative territory. The S&P 500 slipped 0.2%, the Nasdaq Composite edged down 0.1%, and the Dow Jones Industrial Average lost 0.6%.

Semiconductor stocks initially led the market higher as investors stepped in to buy the group’s recent weakness, which many continue to view as a technical correction despite the sharp decline. However, that momentum faded throughout the afternoon. The Philadelphia Semiconductor Index still managed to close 0.6% higher but gave back most of its earlier advance.

Several chip-related companies nevertheless posted notable gains. Lumentum climbed 4.5% and Teradyne added 3.5%, while memory-chip makers benefited from a Bloomberg report indicating that Kimi K3, the latest AI model from Chinese startup Moonshot AI, requires substantial memory capacity to operate. Micron rose 1.9% on the news.

Advanced Micro Devices also outperformed after Microsoft announced plans to deploy AMD’s Helios Rackscale Solution for frontier AI inference while expanding its use of the company’s EPYC processors and Pensando data processing units. AMD gained 1.6%, while Microsoft advanced 2.2%.

Despite those pockets of strength, the broader technology sector struggled to hold its early gains. Information technology finished just 0.1% higher as weakness in several large-cap names offset the semiconductor rebound. Apple fell 2.1%, while Oracle dropped 4.0% after The Information reported the company is facing multibillion-dollar cost overruns in the expansion of its data center infrastructure.

Communication services was the day’s strongest-performing sector, rising 0.7%, helped by a 1.5% gain in Alphabet ahead of its earnings report later this week. Investor sentiment improved after The Information reported that the company is preparing to introduce a new “frozen” AI chip designed to enhance its AI capabilities.

Energy was the only other sector to finish higher, gaining 0.6% as oil prices remained volatile amid escalating geopolitical tensions. WTI crude oil rose $0.92, or 1.1%, to settle at $82.59 per barrel. Early optimism surrounding possible U.S.-Iran negotiations faded after President Trump pledged retaliation for the deaths of two American soldiers in an Iranian missile strike in Jordan. Adding to geopolitical concerns, Yemen’s Houthi rebels declared a maritime blockade on Saudi Arabia, raising fears of a broader regional conflict.

The combination of higher oil prices and rising Treasury yields weighed on the broader market throughout the afternoon, prompting investors to reduce exposure to rate-sensitive sectors.

Consumer discretionary fell 0.4%, although Amazon provided some support with a 1.1% gain. Rising borrowing costs pressured housing-related stocks, with Carvana declining 4.7% to become the weakest performer in the S&P 500. Homebuilders also struggled, sending the iShares U.S. Home Construction ETF down 2.0%.

Health care was the weakest sector of the day, falling 1.2% amid broad selling in biotechnology stocks. Industrials lost 0.8%, weighed down by continued weakness in Honeywell Aerospace, which has struggled since being spun off from Honeywell last month.

Smaller companies also gave up their early gains. The Russell 2000 fell 0.7%, while the S&P MidCap 400 declined 0.8%.

Monday’s session reflected a market still searching for direction. Although semiconductor stocks attracted early bargain hunting, the buying lacked enough conviction to reverse the group’s broader downtrend. As Treasury yields and oil prices climbed throughout the day, investors became increasingly cautious, leaving the major averages on uncertain footing ahead of a pivotal week of corporate earnings that could determine the market’s next move.

Our FTinvest 11 model portfolio declined 0.67% to close at 1,061.44, extending its pullback for a second consecutive session following last week’s record highs. Despite the recent weakness, the portfolio remains comfortably above the 1,000 level and is approximately 3.2% below its all-time closing high of 1,096.33, continuing to retain the vast majority of its strong gains achieved since the June recovery.

FTInvest 11 is now up approximately +14.36% year-to-date, maintaining a robust double-digit return for 2026. While the portfolio has eased from its recent peak, the current decline follows an exceptionally strong advance that carried FTInvest 11 to multiple consecutive all-time highs. The portfolio remains well positioned after its remarkable recovery from the June correction, reflecting the resilience of its disciplined, value-driven investment strategy and its continued focus on long-term capital appreciation.