US markets delivered a mixed performance on Monday as investors balanced easing geopolitical concerns against rising uncertainty over inflation and interest rates. While the Dow Jones Industrial Average managed modest gains, weakness in major technology stocks dragged broader indices lower ahead of a crucial week for economic data.

The Dow Jones Industrial Average rose 0.3%, supported by strength in several blue-chip names. However, the S&P 500 slipped 0.4%, while the technology-heavy Nasdaq Composite fell 1.3% as investors reduced exposure to some of the market's largest growth stocks.

The session followed two consecutive weeks of gains for US equities, with markets having recovered from the volatility that followed the Federal Reserve's latest hawkish policy meeting. However, Monday's trading highlighted the growing tension between optimism over economic resilience and concerns that inflation could remain stubbornly high.

Geopolitical Developments Ease Energy Fears

Markets continued to monitor developments surrounding negotiations between Washington and Tehran.

Concerns initially intensified after Iran announced the closure of the Strait of Hormuz in response to escalating regional tensions involving Israel and Hezbollah. While shipping traffic through the critical waterway continued, volumes remained below normal levels, raising concerns about global energy supplies.

Investor sentiment improved later in the session after mediators reported encouraging progress in negotiations between the United States and Iran. The prospect of de-escalation helped reduce fears of a prolonged disruption to global energy markets.

Oil prices responded by moving lower. Additional pressure came after the US Treasury Department authorized the sale of Iranian oil for a 60-day period, raising expectations of increased supply.

West Texas Intermediate crude fell roughly 2% to around $75 per barrel, while Brent crude declined approximately 3% to trade near $78 per barrel.

Inflation Data Takes Centre Stage

The primary focus for investors now shifts to the release of the Personal Consumption Expenditures (PCE) Price Index later this week.

The PCE index is the Federal Reserve's preferred measure of inflation and is expected to play a significant role in shaping expectations for monetary policy over the coming months.

Markets remain particularly sensitive after April's reading reached its highest level in nearly three years. Recent comments from Federal Reserve officials have reinforced the possibility that interest rates could rise again if inflation fails to moderate.

That uncertainty was reflected in the bond market, where the yield on the benchmark 10-year US Treasury note climbed to 4.51%, up from 4.46% at the end of last week. Rising Treasury yields continue to create headwinds for growth stocks by increasing borrowing costs and reducing the attractiveness of future earnings.

Semiconductor Stocks Continue to Shine

Despite weakness across much of the technology sector, semiconductor companies remained a bright spot.

Micron shares surged approximately 7% to a fresh record high ahead of its quarterly earnings release. Investors continue to view the company as a key beneficiary of accelerating demand for AI-related memory and data-centre infrastructure.

Intel and SanDisk also advanced to new highs as optimism surrounding artificial intelligence investment and semiconductor demand continued to support the sector.

The performance suggests that while investors may be rotating away from some mega-cap technology names, appetite for AI infrastructure and chip-related opportunities remains strong.

Big Tech Weakens While SpaceX Extends Pullback

Large-cap technology companies faced significant selling pressure during the session.

Alphabet fell approximately 5%, making it one of the weakest performers among major technology stocks. Amazon also declined around 5% as investors reassessed valuations amid rising bond yields and policy uncertainty.

Tesla bucked the broader trend, gaining roughly 1% and demonstrating continued resilience despite weakness across the growth sector.

Meanwhile, SpaceX shares continued to retreat following their explosive post-IPO rally. The stock fell another 16% to close near $155, marking its lowest closing level since listing earlier this month. The decline suggests investors are locking in profits after the stock's rapid ascent following its market debut.

Bitcoin Holds Gains While Gold Slips

Cryptocurrency markets remained relatively resilient despite broader market caution.

Bitcoin traded near $64,400 late in the session after briefly surpassing $65,000, its highest level in roughly a week. The cryptocurrency continues to benefit from improving risk sentiment and renewed interest in alternative assets.

Gold moved in the opposite direction, falling approximately 1% to around $4,210 per ounce. A stronger US dollar and rising Treasury yields reduced demand for the precious metal.

The US Dollar Index rose 0.2% to 101, reflecting ongoing expectations that US interest rates could remain elevated for longer.

Market Outlook

Markets are likely to remain cautious in the near term as investors await the latest PCE inflation data and assess its implications for Federal Reserve policy.

A softer-than-expected inflation reading could reignite risk appetite and support both equities and cryptocurrencies. Conversely, any indication that inflation remains stubbornly elevated may strengthen expectations for additional policy tightening, placing renewed pressure on growth stocks and broader market valuations.

The semiconductor sector remains a key area to watch. Micron's earnings report and forward guidance could influence sentiment across the entire AI and chip ecosystem, potentially driving sector-wide volatility.

Oil prices may remain under pressure if diplomatic progress continues and additional Iranian supply reaches global markets. Lower energy prices would help ease inflation concerns and provide support for risk assets.

Investors should continue to monitor Treasury yields, the US dollar, inflation data, and developments in Middle Eastern negotiations. Together, these factors are likely to determine whether markets extend their recent recovery or enter a new period of consolidation.