Wall Street drifts at the start of a week that could swing stocks and
bonds
[August 25, 2026] By
STAN CHOE
NEW YORK (AP) — U.S. stocks drifted to a mixed finish Monday as the
countdown ticks toward potentially market-moving events coming later in
the week. The areas of the bond market that the U.S. Treasury Department
is trying to calm down, meanwhile, eased a bit.
The S&P 500 slipped 0.3% and pulled a bit further from its all-time high
set earlier this month. The Dow Jones Industrial Average added 140
points, or 0.3%, and the Nasdaq composite fell 0.8%.
Tech stocks led the way downward following big swings through the summer
on worries that the frenzy around artificial-intelligence technology
sent prices too high and that the huge demand for AI chips won’t be
sustainable if they don’t produce enough profits.
Chip giant Nvidia has been a tremendous winner of the AI boom and become
Wall Street’s largest and most influential stock because of it. It will
deliver its latest quarterly earnings report on Wednesday, which could
dictate the next big move for AI-related stocks.
Nvidia sank 2.9% and was the heaviest weight on the S&P 500, where the
majority of stocks rose. Drops of 5.8% for Micron Technology and 2.6%
for Broadcom also helped drag the index lower.
All told, the S&P 500 fell 21.51 points to 7,652.86. The Dow Jones
Industrial Average rose 140.15 to 53,417.16, and the Nasdaq composite
sank 200.26 to 25,980.19.
The other big factor moving stocks recently has been the bond market,
where longer-term Treasury yields climbed through the summer on worries
about high inflation, huge government debts and other factors. High
yields make it more expensive for everyone to borrow, not just the
government, and have already pushed up mortgage rates and hurt the
housing industry.
The U.S. Treasury Department announced a surprise move last week to
increase the size of planned buybacks of Treasurys, which could help
contain the rise in yields for 10- and 30-year Treasurys. But analysts
warned the move may have only a limited effect because of how small the
size of the buybacks are and how they do not fix the fundamental
problems of too-high debt for the U.S. government and expensive oil
prices because of the war with Iran.
On Monday, the yield of the 10-year Treasury eased to 4.70% from 4.74%
late Friday and is back below where it was late Tuesday, before the U.S.
Treasury Department made its surprise announcement.
Helping to bring yields down on Monday was a drop in oil prices. Brent
crude fell 2.3% to $90.54 per barrel.
Last month it zigzagged between $72 and $102 as hopes rose and fell that
the United States and Iran could reach a deal that would allow oil
tankers to freely exit the Persian Gulf again. The United States on
Monday announced new sanctions aimed at Iran, which helped drag the
value of Iran's currency to a record low against the U.S. dollar.
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Specialists Dilip Patel, right, and Dylan Halvorsen work on the
floor of the New York Stock Exchange in New York, Friday, Aug. 21,
2026. (AP Photo/Yuki Iwamura)
 Despite Monday’s easing of Treasury
yields, analysts warn the U.S. government’s attempts to influence
the bond market could ultimately mean higher pressure on inflation.
Inflation already is worse than nearly everyone would like and has
been for years.
That raises the pressure on the Federal Reserve to raise the federal
funds rate, which affects very short-term overnight loans. When the
Fed raises that rate, it could help keep a lid on inflation by
trying to slow the overall economy and undercutting prices for
stocks and other investments.
The Fed’s new chairman, Kevin Warsh, is set to deliver a speech
Friday at an economic symposium in Jackson Hole, Wyoming. The
mountain setting has been the backdrop for major Fed policy
announcements in the past, but investors are unsure of what they may
get from Warsh this time around.
Warsh has insisted that he wants to give financial markets fewer
clues about what the Fed will do with interest rates, hoping that
markets react more to incoming data about the economy and inflation
than to what the Fed is signaling.
But with U.S. Treasury Secretary Scott Bessent announcing his move
last week, Warsh now holds the ball, according to economists at Bank
of America. Expectations are high among investors for Warsh to talk
about inflation and how the Fed could potentially react, and a
failure to deliver could lead to bond yields rising further, they
said.
In stock markets abroad, indexes dipped around much of the world.
South Korea’s Kospi fell 3.1%, and Hong Kong’s Hang Seng dropped
1.9% for two of the biggest moves.
Seoul has been home to some of the world’s sharpest swings this
summer because it is dominated by two tech titans benefiting from
the AI boom, Samsung Electronics and SK Hynix.
___
AP Business Writers Michelle Chapman and Elaine Kurtenbach
contributed to this report.
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