U.S. stocks fell on Monday, dragged down by the soaring yields of Treasury bonds at the start of this week.

The Dow Jones Industrial Average fell by about 347 points, a decline of 0.67%. The S&P 500 Index tumbled 0.77%, and the Nasdaq Composite Index dropped 0.92%. At its intraday low, the Dow Jones Index once fell by more than 400 points, with the S&P 500 Index declining by about 1%.

Major stock indices broke away from their lows around noon, and White House officials stated that Trump is willing to provide Iran with sanctions relief on nuclear issues. These reports caused crude oil prices to fall far below their daily highs.

However, Treasury yields continued to rise on top of the significant fluctuations last week. The yield on the benchmark 10-year U.S. Treasury note climbed above 5.2%, and the yield on the 30-year Treasury note broke through 5.5%. Both are trading near multi-year highs.

"Seven Sisters" sector: NVIDIA rose by 1.68%, Apple fell by 0.78%, Tesla fell by 3.94%, Google fell by 0.56%, Meta Platforms fell by 4.79%, Amazon fell by 1.41%, Microsoft fell by 1.35%.

International oil prices rose slightly on the 28th. As of the close of trading on that day, the price of light crude oil futures for delivery in November at the New York Mercantile Exchange increased by 19 cents to close at $92.60 per barrel, a gain of 0.21%; the price of Brent crude oil futures for delivery in November at the London Mercantile Exchange increased by 96 cents to close at $105.28 per barrel, a gain of 0.92%.

U.S. Treasury yields continued the significant upward trend seen last week. The yield on the benchmark 10-year Treasury note broke through 5.2%, and the yield on the 30-year Treasury note reached 5.5%, both of which are at multi-year high levels.

In terms of Asian stock markets, the Nikkei 225 index closed down 0.73%; the South Korean Composite Index tumbled 2.7% to close at 6,889.74 points; the Australian S&P/ASX 200 index rose 0.17%; and China's mainland CSI 300 index fell 2.22%.

European major stock indices closed with mixed results. The Euro Stoxx 600 index rose by 0.12%, the Euro Stoxx 50 index rose by 0.1%, and the Eurozone blue-chip index rose by 0.11%. The UK FTSE 100 index rose by 0.05%, Germany's DAX index fell by 0.01%, France's CAC 40 index rose by 0.14%, and Spain's IBEX index fell by 0.33%.

Wall Street has just concluded a week of upward trends, with the technology and technology-related sectors performing exceptionally well. The stock price of Meta surged by nearly 13% during this period, and traders responded enthusiastically to the Muse artificial intelligence agent launched by the company; Microsoft's stock price increased by more than 4%; both Apple and NVIDIA saw gains of over 1%.

Even as U.S. Treasury yields climbed to multi-year highs, tech stocks continued to rise. Due to persistently high inflation, traders increased their bets that the Federal Reserve would further raise interest rates. The yield on benchmark 10-year U.S. Treasuries reached a new high since 2007, while the yield on 30-year Treasuries touched a peak from 2004; the yield on 2-year Treasuries also jumped by about 17 basis points last week.

Ed Adeney, President of Adeney Research Company, wrote: "The rapid rise in global two-year government bond yields signals that due to the renewed escalation of conflicts in the Middle East, oil prices may remain high for a long time, leading to inflationary pressures. Major central banks will need to further raise policy interest rates. However, regrettably, the continuous increase in interest rates will also exacerbate the risk of large-scale government fiscal deficits worldwide."

Interest rates remain the focus of the market this week, with a series of significant economic data releases to come. The inflation indicator that the Federal Reserve is particularly concerned about – the Personal Consumption Expenditures (PCE) Price Index for August ( PCE ) – will be announced on Wednesday; new manufacturing data for the United States in August will be released on Thursday; and the much-anticipated September Non-Farm Payroll report is scheduled for Friday.

Morgan Stanley: The U.S. debt market is facing a 'perfect storm'.

Morgan Stanley pointed out that the resilience of economic growth, inflation stickiness, risks of intervention in the energy market, the Fed's shift towards a more hawkish stance, corporate bond issuance, fiscal deficits, and uncertainties in Treasury Department operations have all contributed to rising yields. Since March, the yields on 2-year, 5-year, and 10-year U.S. Treasurys have risen by approximately 120-150 basis points in total; after the Fed raised interest rates by 25 basis points in September, the market has factored in nearly another 100 basis points of additional tightening.

Morgan Stanley believes that the market may have overestimated the final interest rate hike, but there is a lack of fundamental catalysts in the short term to shift expectations towards a more dovish stance.

Goldman Sachs: U.S. stocks are showing a pattern of "strong indices, weak confidence," and a catch-up rally may become the main trend in the next phase.

Goldman Sachs stated that the U.S. stock market is currently presenting an unusual pattern: the indices are performing strongly, but investor confidence is weak. This means that there is still potential for further gains in the market, and stocks that were left behind by the leading AI stocks earlier on are expected to see a catch-up rally.

The S&P 500 index has risen by 14% this year, but Goldman Sachs' U.S. stock sentiment indicator has dropped to -0.9, matching its March low.

Goldman Sachs strategist Ben Schneider and his team stated in a report on September 25 that this reading indicates that if the macroeconomic environment improves, investors still have room to increase their stock exposure. Meanwhile, Goldman Sachs' preferred market breadth indicator has dropped to its lowest level since the internet bubble era. For investors, this divergence could be significant if uncertainties regarding interest rates and economic growth subside.

Goldman Sachs believes that there is room for an overall upward movement in the market and a rebound in lagging stocks, but the abnormally narrow market breadth may also lead to continued volatility in momentum trading.

JPMorgan is optimistic that U.S. tech stocks will once again attract funds: Reduced positions and falling valuations create room for improvement.

JPMorgan Chase's team of strategists believes that as the degree of position crowding decreases, earnings performance strengthens, and valuations become more realistic, tech stocks are set to regain some of the momentum they lost since the end of the first half of the year, and investors are expected to re-enter this sector.

A team led by Mislav Matejka stated in a report released on Monday that the upward trend over the past three months has paused, making the position structure cleaner and stock prices less expensive. Coupled with rising capital expenditures and continued strong profitability, this should "support investors in re-engaging with this sector." Tech stocks have still led the S&P 500 index this year, but the upward momentum has cooled down in recent months, and there are concerns that the substantial investments made by AI may not yield the returns that optimists anticipated.

Matejka writes: 'We suspect that there won't be a significant slowdown in the end, as this competition is still one of life and death, with the winner taking all.' JPMorgan Chase stated that although it's unlikely for the kind of gains seen in the first half of the year to recur, opportunities still exist.

Retail investors are withdrawing, while institutions take over! Amid the US debt storm, "smart money" is not pulling out but rather pouring in: $18.4 billion in options funds have flowed into the US stock market, with AI still being the top choice.

The latest data shows that institutional investors are taking over the lead in the U.S. stock market. After years of strong buying, retail traders seem to be gradually stepping back from the scene.

Meanwhile, data from Vanda Research shows that despite the soaring yields on U.S. Treasury bonds, large investors have continued to hold stocks steadily.

Vanda Global Market Strategist Virej Patel wrote in a report to clients last Friday: 'Amidst the increased macro volatility this week, institutional investors have shown an unexpectedly strong resilience.'

Data shows that the inflow of options funds from institutional investors (18.4 billion US dollars) is approximately three times the average in September of previous years. Patel stated that despite the yields on 10-year and 30-year US Treasury bonds rising to their highest levels in over a decade, the inflow of large-scale funds has continued to increase over the past five trading days. He believes that, within the broader context of risk aversion, this is a “quite constructive signal” hidden within the risk appetite of institutional investors.

He mentioned that amidst market volatility, institutional traders are selecting high-quality targets related to artificial intelligence ( AI ) for their investments.