Stocks Helped Early by Weak Oil, But Chips Down

Geopolitics Dominate, Putting Rally on Pause Early

By Joe Mazzola

Markets are entering a quieter stretch following last week’s Fed rate hike, leaving investors focused on oil prices, Treasury yields, and geopolitical developments. Oil has continued to retreat, with WTI falling back toward $90 per barrel, while the 10-year Treasury yield has slipped below 5%. Lower oil prices and yields helped fuel a strong rally in technology stocks Monday, with the Nasdaq gaining more than 2% and reaching a new record high.

At the same time, market leadership remains relatively narrow. Only 4% of S&P 500 stocks were trading at four-week highs as of Friday, meaning the broader market could be more sensitive to a pullback if the current leaders lose momentum. Investors are also watching the labor market, as continuing unemployment claims recently reached their lowest level since January 2024.

Looking ahead, geopolitical developments will remain an important focus, including President Trump’s meetings with Gulf leaders and his upcoming meeting with Chinese President Xi. Several Federal Reserve officials are also scheduled to speak this week, potentially providing additional insight into the Fed’s recent rate hike.

Three Things to Watch

Oil and Treasury yields: Oil prices have continued to decline, while the 10-year Treasury yield has moved back below 5%. The combination has recently provided some support for technology stocks.

A narrowing market: The rally has become increasingly concentrated, with only 4% of S&P 500 stocks recently trading at four-week highs. If market leaders stumble, this narrow breadth could leave the broader indexes more vulnerable to a pullback.

Geopolitics and the Fed: Investors are watching developments in the Middle East and the upcoming U.S.-China meeting, while speeches from several Fed officials could offer clues about the outlook following last week’s rate hike.

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