The S&P 500 started the week slightly lower on Monday, as a sharp sell-off in major technology and semiconductor stocks outweighed the positive impact of falling Treasury yields.
The broad market index declined 0.28% to close at 7,652.86, while the Nasdaq Composite dropped 0.76% to 25,980.19. Meanwhile, the Dow Jones Industrial Average outperformed, gaining 140.15 points, or 0.26%, to finish at 53,417.16.
Technology stocks were the main drag on the market, particularly the semiconductor sector. Micron Technology fell 5.8%, while AMD and Broadcom declined more than 3% and 2%, respectively. The iShares Semiconductor ETF (SOXX) dropped 2.7%, reflecting broad weakness across chipmakers.
The selling pressure extended beyond the semiconductor industry. Coherent and Lumentum each lost more than 4%, while Sandisk fell 6%. Corning declined nearly 3%, and Seagate Technology dropped 6.5%.
Meanwhile, Treasury yields moved lower following reports that the Treasury Department could potentially use its General Account to support future bond buyback operations. The 10-year Treasury yield fell by more than 3 basis points to 4.704%, while the 30-year yield declined by over 4 basis points to 5.234%, after reaching levels above 5.3% last week.
The development follows comments from Treasury Secretary Scott Bessent, who indicated that the government's planned expansion of debt buybacks could exceed the previously announced $4 billion. While the initial buyback announcement provided temporary relief to longer-term yields, the effect on the bond market proved short-lived.
Global markets have recently faced pressure from rising government bond yields, with borrowing costs in countries including Japan, France, and Germany reaching multi-year highs. Investors also remain concerned that the ongoing U.S.-Iran conflict could keep oil prices elevated, potentially adding to inflation pressures.
Market sentiment was further affected after President Donald Trump announced plans to raise tariffs to 50% on Canadian imports of cars, trucks, automotive parts, and steel, effective January 1, 2027.
Looking ahead, investors will closely watch this week's July Personal Consumption Expenditures (PCE) inflation data, scheduled for Wednesday. The technology sector will also remain in focus as Nvidia reports earnings on Wednesday, followed by Marvell Technology on Thursday.
