Wall Street’s main indexes were off session lows on Monday as a rebound in technology stocks softened the blow from investor concerns that soaring oil prices could exacerbate inflation pressures.

Hostilities in the Middle East entered their tenth day and Iran named Mojtaba Khamenei, son of the late Ali Khamenei, as the supreme leader, signaling firm control of hardliners in Tehran.

Crude prices were pinned at $100, as investors weighed the Group of Seven countries’ decision to not release emergency oil reserves, saying that there was no immediate supply shortfall. Supply concerns lifted prices to nearly $120 earlier in the day.

The spike in energy prices is likely to fuel stagflation fears, as data last week showed a weakening U.S. jobs market, even as broader economic activity accelerated.

“With oil prices going up 50% in a matter of weeks – that’s a displacement this market hasn’t seen in years. So, this market doesn’t even know how to handle these oil prices,” said Dennis Dick, founder and market structure analyst at Triple D Trading.

Travel stocks, which were pressured the most last week, were also the hardest hit on Monday.

An index tracking S&P 500 passenger airlines dropped over 2.6%, while cruise stocks such as Carnival Corp lost 4.3% and Royal Caribbean Cruises fell 2.5%.

Big banks, the backbone of any economy, also took a hit with Morgan Stanley down 2.3% and Citigroup falling 3%.

A prolonged period of higher oil prices could weigh on equities this year, Goldman Sachs said, warning that every one percentage point drop in economic growth could cut S&P 500 earnings by as much as 4%.

Technology stocks gained the most among S&P 500’s 11 sectors, rebounding from February’s selloff and helping limit losses on Monday.

Chip company SanDisk gained 3.2%, Broadcom climbed 3.2% and Nvidia added 1%.

Major Markets Fall

At 11:58 a.m. ET, the Dow Jones Industrial Average fell 398.03 points, or 0.84%, to 47,103.52, the S&P 500 lost 29.98 points, or 0.44%, to 6,710.04 and the Nasdaq Composite lost 14.08 points, or 0.06%, to 22,373.60.

The small-caps Russell 2000 index dropped 1.2% and was a whisker away from hitting a 10% drop from all-time highs. An index ending 10% lower from its record closing high is commonly referred to as correction territory.

The CBOE Volatility Index, Wall Street’s fear gauge, dropped 1.8 points, having touched April highs earlier in the day.

Prices of traditional safe havens such as precious metals also came under pressure, with Endeavour Silver and Barrick Mining down 3% and 2%, respectively.

Bucking the trend, some defense companies such as Smith & Wesson and Kratos were marginally higher.

The spike in energy costs complicates the work of global central banks, and for the Federal Reserve, inflation triggers are likely to become a greater focus.

Policymakers have signaled they will wait to assess the impact of the energy cost spike before deciding on monetary policy. However, the yield on the two-year Treasury note, edged higher and briefly touched its highest since late November, as investors priced in elevated interest rates.

“The Fed can’t even consider cutting rates anytime soon. So, if they were thinking about a possible cut in like May or June, that’s completely off the table,” Dick said.

Friday’s soft jobs report boosted expectations for a 25-basis-point interest rate cut in June. However, traders on Monday pushed those odds to September, according to LSEG-compiled data.

Among others, concert giant Live Nation rose 4.6% after reaching a proposed settlement with the U.S. Justice Department.

Last week, the biggest declines were in the blue-chip Dow that logged its steepest weekly drop since early April 2025, while the Russell 2000 posted its biggest weekly loss since early August.

Markets face a data-heavy week, including job opening numbers, personal consumption expenditures – the Fed’s preferred inflation gauge – and a second estimate of quarterly GDP.

Declining issues outnumbered advancers by a 3.4-to-1 ratio on the NYSE and by a 2.12-to-1 ratio on the Nasdaq.

The S&P 500 posted four new 52-week highs and seven new lows while the Nasdaq Composite recorded 33 new highs and 154 new lows.

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(Reporting by Johann M Cherian, Pranav Kashyap; Additional reporting by Shashwat Chauhan and Utkarsh Tushar Hathi in Bengaluru; Editing by Mrigank Dhaniwala, Shinjini Ganguli and Maju Samuel)