Oil plunges over 8%, Treasury yields fall as US-Iran pause strikes

By Karen Brettell Mon, July 27, 2026 at 1:26 PM PDT | 4 min read

Stocks were mixed on Monday while oil prices tumbled and Treasury yields dropped after the United States and Iran paused strikes over the weekend, halting two weeks of attacks.

The news raised hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume through the Strait of Hormuz. Investors remained cautious, however, as tensions stayed high.

President Donald Trump said on Monday the United States was having "good talks" with Iran, and there was a chance of a deal over their conflict, but added that U.S. strikes would resume if negotiations failed to deliver.

"What markets are struggling to digest is we're in the consistent kind of back and forth where it seems like, again, Donald Trump is showing his ability to control sentiment despite investors really not having a viable off-ramp or an end to the war and durably lower oil prices," said Jeff Klingelhofer, managing director at Aristotle Pacific Capital in Newport Beach, California.

Central bank interest rate decisions and key tech company earnings due this week were also keeping some investors on the sidelines.

Market Moves

• U.S. crude fell 8.21% to $81.98 a barrel
• Brent crude fell 9.31% to $87.77 a barrel
• Yield on benchmark U.S. 10-year notes fell 3.03 basis points to 4.649% (from 4.679% on Friday)

U.S. Stock Indices

| Index | Change | Points | Level | |-------|--------|--------|-------| | Dow Jones Industrial Average | +0.51% | +262.98 | 52,210.23 | | S&P 500 | +0.02% | +1.24 | 7,413.22 | | Nasdaq Composite | -0.17% | -43.74 | 24,932.08 |

European Markets

• Pan-European STOXX 600 rose 0.02%
• Europe's broad FTSEurofirst 300 fell 1.11 points, or 0.04%

Central Banks in Focus

The U.S. Federal Reserve is expected to hold rates steady when its two-day meeting concludes Wednesday, though traders see a risk of a hike.

Fed expectations have been whipsawed after the recent uptick in oil prices reignited inflation fears. Fed Chairman Kevin Warsh's preference for less forward guidance is adding to the uncertainty over whether the central bank will raise rates.

Fed funds futures traders are currently pricing in:

• 38% odds of a hike on Wednesday
• 83% probability of an increase by September

"A hold is the most likely outcome, though a few dissenting votes in favor of a hike are possible," Edward Jones senior analyst Brian Therien said in a note.

The Bank of England will announce its policy decision on Thursday, followed by the Bank of Japan on Friday. Both are expected to hold rates steady while flagging continued caution about inflation risks ahead.

Currency and Commodities

• Dollar dipped 0.07% against the yen to 163.73
• Gold climbed 0.73% to $4,082.16 an ounce

A Wave of Companies Report Earnings

Investors are also watching corporate earnings, with roughly one-third of S&P 500 companies due to report this week.

Results from "Magnificent Seven" members Microsoft, Amazon.com, Meta, and Apple will be seen as a key test of the AI trade.

Negative cash-flow reports from Alphabet and Tesla last week added to concerns about debt-fueled corporate spending, while Chinese chipmaker CXMT's strong stock market debut signaled intensifying competition for the U.S. semiconductor industry.

Key Data This Week

• U.S. advance second-quarter GDP reading
• June PCE price index
• Personal income and consumption data
• Weekly jobless claims
• Second-quarter employment cost index
• July Michigan consumer sentiment survey

Data on Monday showed that new orders for key U.S.-manufactured capital goods increased strongly in June while shipments surged by the most in 4-1/2 years, as businesses ramped up spending on artificial intelligence, suggesting the economy maintained a fairly strong pace of growth in the second quarter.

Euro Zone Data Schedule

• Flash second-quarter GDP
• July economic sentiment and consumer confidence
• Flash inflation
• June unemployment figures

The Ifo Institute's survey on Monday showed German business morale improved more than expected in July, driven by significantly stronger expectations.

(Reporting by Karen Brettell; Additional reporting by Sruthi Shankar, Chuck Mikolajczak, Johann M Cherian, Will Dunham, Ragini Mathur, Florence Tan, and Trixie Yap)