Stocks struggled Monday as rising oil prices and higher Treasury yields weighed on market sentiment.

The Dow Jones Industrial Average dropped 398.51 points, or 0.94%, ending at 41,954.24. The S&P 500 slid 0.96% to 5,695.94, and the Nasdaq Composite lost 1.18% to close at 17,923.90.

The benchmark 10-year Treasury yield rose more than 4 basis points to 4.02%. That marks the first time since August that the yield topped 4%. Oil prices also rose as tensions in the Middle East remain high. U.S. crude climbed more than 3% to settle above $77 per barrel.

Monday's moves come after a bumpy week for stocks that saw the major averages grind out modest gains. The S&P 500 added 0.2% for the week, while the Nasdaq Composite inched up 0.1% and the Dow added 0.1%.

"You're coming off a week that was saved by the jobs report on Friday. The two things I think investors are watching with the most caution here are the yields of Treasurys are inching back up and … you've got energy prices creeping higher," said Art Hogan, chief market strategist at B. Riley Wealth.

"Both those things probably have investors sort of looking at this and saying, 'I wonder if this gets worse before it gets better,' and we don't think it will," he added. "It's certainly a reason to be cautious into the start of an earnings report season."

Energy stocks, up about 0.4%, were the only sector in the S&P 500 to close in positive territory. The utilities and consumer discretionary sectors were among the benchmark's laggards, both down around 2%.

Key releases in the week ahead include the Federal Reserve meeting minutes on Wednesday and the consumer price index report on Thursday. Earnings season also starts to heat up, with results from Delta Air Lines and JPMorgan Chase due out Thursday and Friday, respectively.

Stocks close lower

Stocks closed lower to end Monday's trading session.

The Dow Jones Industrial Average lost 398.51 points, 0.94%, to settle at 41,954.24. The S&P 500 fell 0.96% to close at 5,695.94, while the Nasdaq Composite declined 1.18% and finished at 17,923.90.

— Lisa Kailai Han

U.S. equities appear stretched at their current levels, JPMorgan says

JPMorgan believes U.S. equities currently look stretched after a strong recent rally, which could contribute to both higher concentration risk and potential for momentum reversal.

"If markets weaken, U.S. typically held up better than other regions during risk-off periods, but the concern is that the U.S. is trading at relative P/E and EPS highs, and that could constrain its absolute performance from here," the bank wrote.

JPMorgan added that the U.S. is currently trading extremely expensive versus its peers, and that the region's profitability versus the rest of the world might be peaking as well.

— Lisa Kailai Han

Bond market recession indicator getting close to flashing again

The yield spread between the 10- and 2-year Treasury notes is getting close to flipping back into danger territory.

As the trading day wound down Monday, the gap between the two durations was around 2.5 basis points after peaking close to 23 on Sept. 25. The 2-year has soared lately while the 10-year is climbing but less aggressively.

A negative value between the two yields, with the 2-year going above the 10-year, has been a nearly fail-safe indicator of recessions going back to at least the mid-1970s. The curve normalized in early September after being inverted since around early July 2022. An inversion signals a recession usually in the next 12 to 18 months.

— Jeff Cox

Super Micro surges on shipment data

Shares of Super Micro Computer jumped around 15% during Monday's session following the computer server company's announcement that it recently deployed more than 100,000 graphics processing units with its liquid cooling solution for "some of the largest AI factories ever built" and other cloud service providers.

The stock has soared more than 66% year to date and more than 22% over the past month.

— Sean Conlon

U.S. equities may struggle to rally from here, Nomura says

A strong September jobs report shed light on the strength of the U.S. economy last Friday, with revived hopes of a successful soft landing also boosting stocks higher.

But according to Nomura, U.S. equities could struggle to rise further from here.

"We think U.S. equities may struggle to make significant gains for as long as macro hedge funds continue downsizing their aggregate net long position in U.S. equities," the bank wrote. "A steep drop in volatility looks improbable — at least until the U.S. presidential election is behind us — and for that reason volatility control strategies also look unlikely to add much to their long exposure."

— Lisa Kailai Han

New exchange-traded products pair foreign stocks with a currency hedge

Three new exchange-traded products launched Monday that could shake up the way investors can gain exposure to international stocks.

Precidian Investments debuted securities that include the American depositary receipt for foreign stocks, along with a currency hedge. The first three so-called "ADRhedged" products track AstraZeneca, HSBC and Shell, with more products in the pipeline.

"When you buy an ADR, you actually have two investments inside that security: the individual company, and the underlying currency versus the U.S. dollar. … If you don't want currency risk, we can help you mitigate that," said Stuart Thomas, founding principal at Precidian.

The new products are listed on Cboe. There are already 65 funds similar to this trading in Canada, with about 6 billion Canadian dollars in assets under management, according to Cboe.

"We look at ADRhedged as another point of innovation on a very tried and true product — the ADR," said Rob Marrocco, Cboe's global head of exchange-traded product listings.

— Jesse Pound

Downward revisions in third-quarter earnings estimates could be reason behind Monday sell-off, says Sam Stovall

Sam Stovall, chief investment strategist at CFRA Research, pointed to a pullback in third-quarter earnings expectations as a source of market weakness to start the week.

Stovall theorized that these revisions could be due to management teams tempering expectations so they can beat earnings forecasts once again. The strategist noted that this been a pattern in the past, with actual results exceeding end-of-quarter estimates in 60 of the past 62 quarters.

"I like to say that because the earnings bar is now set so low, rarely does one injure themselves falling out of a basement window," he told CNBC in an interview.

— Lisa Kailai Han

Energy stocks outperform once again

Energy stocks in the S&P 500 bucked the broad market downtrend on Monday, building on their recent outperformance.

The sector rose 0.5% in the session, making it the only of the 11 that comprise the broad index to track for gains. By comparison, the S&P 500 as a whole slid 0.8%.

Diamondback Energy led the sector higher with a gain of more than 2%. EOG Resources followed, posting a 1% advance.

Monday's moves build on last week's 7% jump. That marked the best weekly performance for the sector in nearly two years.

— Alex Harring

Citi strategists expect higher earnings per share growth in 2025 amid renewed soft landing hopes

Citi strategists are forecasting steady global growth heading into next year amid easing inflation and a loosening U.S. labor market.

After flat earnings growth in 2023, Citi analysts' consensus estimates point to more than 10% global earnings per share growth in 2024 and more than 13% in 2025, with projected earnings per share growth strongest in emerging markets and in the U.S.

"Global equities typically fare well around rate cuts. Global equities are higher on average 12m after the start of easing cycles. Stocks have only traded lower around crises," the firm said in a Friday note. "Typically, upside is driven by multiple rerating, while earnings decline. This time, we expect multiples to remain steady, with upside driven by earnings growth."

— Pia Singh

Canaccord Genuity: 'Now is not the time to fight the Fed or the tape'

Despite the tumultuous start to October trading, Canaccord Genuity said investors should be ready to buy into the market.

Friday's rally on the back of jobs data allowed the S&P 500 to eke out a win on the week despite struggling in prior sessions. That marked its fourth straight positive week.

It also kicked off a historically strong quarter. Canaccord Genuity data found that the S&P 500 has a median gain of more than 5% in the fourth quarter, according to historical data going back to 1957. Additionally, the firm found that the broad index has been positive during this three-month stretch in more than three out of every four years.

On top of seasonal trends, analyst Michael Welch also noted the Federal Reserve's rate cutting cycle and recent all-time highs in both the S&P 500 and S&P 500 Equal Weight Index provide reason for optimism.

"We continue to believe now is not the time to fight the Fed or the tape, but it is an opportunity to position for a potential fourth-quarter rally, especially on any pullback," Welch told clients in a Monday note.

— Alex Harring

Tech stock struggles could open door for tactical trades, investors say

Tech stocks were under pressure again on Monday, with the Nasdaq Composite down about 0.4% in midday trading. The Nasdaq underperformed the S&P 500 in the third quarter and has not shown signs of a resurgence in October so far.

The rotation away from megacap tech stocks in recent months could present a chance for investors to make tactical trades to reshape their portfolio as the end of the year approaches.

"Our message, based on what we believe now, would still be to take some profits in some of those names and continue to spread the risk out a little bit more," James Ragan, director of wealth management at D.A. Davidson, told CNBC.

Read more about what is next for tech stocks on CNBC Pro.

— Jesse Pound

Markets remain resilient to geopolitical backdrop, says Deutsche

The market managed to move higher last week despite growing geopolitical risks that pushed oil prices higher. Deutsche Bank said this is likely because today's geopolitical risks are not weighing much upon global growth.

"Indeed, the biggest market moves recently have been in response to China's stimulus and the US jobs report, precisely because they shifted the macro trajectory relative to previous expectations," strategist Henry Allen wrote in a Monday note.

Furthermore, the rise in oil prices is not yet raising inflationary fears at a global level, Allen noted.

"If we did see a bigger rise in oil prices that pushed up global inflation, then that would be concerning from a market perspective, as it would likely mean that central banks felt less able to deliver rate cuts, and the monetary easing priced in may not materialize. But that isn't happening so far," said Allen.

— Hakyung Kim

Scholar Rock shares take off after favorable trial results

Scholar Rock shares soared more than 300% on Monday after the biopharmaceutical company's trial showed positive results.

At Monday's session highs, shares traded above $33. The stock had closed Friday's session at just $7.42 per share.

That eye-popping jump comes after Scholar Rock said a phase three study for patients with spinal muscular atrophy had met its primary endpoint. The study tested apitegromab, which is an investigational muscle-targeted therapy.

If Monday's performance holds, it will mark the biggest one-day gain for the stock in its history.

— Alex Harring

Stocks on the move during midday trading

These are the stocks making the biggest moves during midday trading:

• Generac Holdings — Shares of the maker of power generators surged nearly 9% as Hurricane Milton intensified into a Category 5 storm.
• Amazon — The e-commerce stock lost 2.9% after Wells Fargo downgraded shares to equal weight from overweight and cut its price target, citing slowing growth and competition from Walmart.
• Pfizer — Shares of the drugmaker gained nearly 3%. Citing sources families with the matter, CNBC reported that activist investor Starboard Value has amassed a nearly $1 billion stake as it pursues a turnaround at the company.

Read the full list here.

— Samantha Subin

Campbell Soup may benefit from GLP-1 drug usage, says Bernstein

The growing demand for GLP-1 drugs such as Novo Nordisk's Ozempic and Wegovy may send shares of Campbell Soup higher, according to Bernstein.

The investment firm notes that many users of the medications have reported that they tend to eat more of protein-rich foods such as soup and less of sweet snacks. With that in mind, the firm upgraded Campbell to outperform from market perform on the basis that soup and broth categories could be beneficiaries of greater GLP-1 usage. Shares of the food company have risen more than 9% this year.

"Campbell's was the first company to acknowledge that GLP-1 drugs do seem to be having a modest impact on sales of packaged food, and pointed out that their portfolio of products is now fairly well-aligned with the needs of GLP-1 patients," the firm wrote in a Monday note. "Having been rather out of favor for many years before the pandemic, soup volumes now seem to be in recovery."

Meanwhile, shares of chocolate maker Hershey — which the firm downgraded to market perform from outperform in light of the reported consumption patterns — fell around 2% on Monday following the call.

CNBC Pro users can read more here.

— Sean Conlon

Analysts assess Uber, Lyft risks ahead of Tesla robotaxi event this week

Sentiment on ride-share stocks has grown slightly cautious over the past month, particularly as investors await announcements from Tesla's robotaxi event on Thursday.

Although the details around the event are bare, eyes are on Tesla to unveil a prototype of its Cybercab robotaxi, provide a fleet rollout schedule and a business model update and reveal advancements in its driver assistance features and artificial intelligence capabilities.

Wells Fargo analyst Ken Gawrelski said he does not believe Tesla can "realistically deploy a meaningful L5 self-driving fleet in 2025," referring to the highest level of automation for vehicles, level 5. But the risk to other autonomous vehicle companies bears monitoring given that Tesla's vision-only, camera-based self-driving technology has superior unit economics to both Uber and Waymo, he noted.

According to Wells Fargo, Uber is slightly more insulated from Tesla's upcoming announcements, given its deals with other ride-share companies such as Waymo that could allow it to compete against Tesla if it can expand AV operations faster than expected. Lyft is more exposed as the company has not signed any AV deals, Gawrelski said.

Similar to Gawrelski, Bernstein analyst Toni Sacconaghi said he remains "cautious about Tesla's odds of all-out winning in self-driving technology" given its regulatory roadblocks, rating the EV stock underperform.

Uber shares are up 0.3% so far this month, while Lyft has shed 1.5%. Tesla is down 6.6% month to date, losing more than 2% on Monday alone.

— Pia Singh

These stocks are moving as Hurricane Milton intensifies

Shares of backup power generation company Generac Holdings surged on Monday as Hurricane Milton rapidly strengthened into a Category 4 storm.

Generac hit an intraday high of $174.08, up about 8.7% over Friday's close. The power generation company also hit a new 52-week high.

Milton is forecast to approach Florida by Wednesday, according to the National Hurricane Center. Tampa Bay could face a storm surge of eight to 12 feet, according to forecasters.

Insurance stocks that have weather catastrophe exposure, meanwhile, are falling on potential insured losses tied to Hurricane Milton. Allstate, Travelers and Chubb saw their shares fall more than 3%, while Progressive and AIG all declined more than 1%.

Universal Insurance, based in Fort. Lauderdale, plunged more than 26% as the catastrophe-prone carrier with Gulf Coast exposure could see heightened hurricane risks.

— Spencer Kimball

Shares of Arcadium on pace for best day ever

Shares of mining giant Arcadium Lithium were last trading nearly 34% higher, on pace for the stock's best day ever since going public in January 2024.

Arcadium stock was boosted after miner Rio Tinto expressed interest in acquiring the company. If the deal goes through, Rio Tinto would become one of the world's largest suppliers of lithium.

More than 41.3 million shares of Arcadium had traded as of Monday morning. This was almost four times its 30-day average volume of 11.2 million shares.

— Lisa Kailai Han, Lee Ying Shan, Gina Francolla

Oil prices are rising on Israel-Iran war risk. OPEC is key to how high prices can go

Oil prices are rising again as traders fear Israel will strike Iran's oil industry, but OPEC should have enough spare crude to plug a supply gap, according to Goldman Sachs.

U.S. crude oil rose $1.15, or 1.55%, to $75.53 per barrel at around 9:39 a.m. ET on Monday. Brent was up $1.10, or 1.41%, to $79.15 per barrel.

But the key risk to oil prices is how quickly OPEC members Saudi Arabia and the United Arab Emirates can roll oil back on the market and plug a supply gap if Iran's production is hit, according to Goldman. Saudi and UAE can typically offset 80% of disrupted production within two quarters.

In scenario where 2 million barrels per day of Iranian production are disrupted over six months, Brent would rise to a peak of $90 per barrel if OPEC rapidly deploys spare capacity, according to Goldman.

In a scenario where one million bpd of Iranian production is disrupted over a sustained period, Brent would peak in the mid-$80 per barrel range if OPEC gradually offsets the shortfall, according to the investment bank.

— Spencer Kimball

Crude futures hit highest level since Aug. 30

Mounting geopolitical tensions in the Middle East have pushed oil prices higher in recent days. On Monday morning, West Texas Intermediate's November-dated futures and Brent's December-dated futures both reached their highest levels since Aug. 30.

The Energy Select Sector SPDR Fund (XLE) was last trading 0.6% higher, and was up 7% in the prior five days. Shares of APA, Chevron, Exxon, Valero and Devon were all up 1% or more Monday morning.

— Lisa Kailai Han, Gina Francolla

Stocks open lower to kick off trading week

Stocks opened lower Monday morning.

The S&P 500 fell 0.3% to start the session. The Dow Jones Industrial Average lost 0.5%, or 190 points, while the Nasdaq Composite slipped 0.3%.

— Lisa Kailai Han

Stocks making biggest moves before the bell: Apple, Amazon and more

These are the stocks moving the most in premarket trading:

• Apple — Shares declined 1.4% after Jefferies downgraded the megacap tech company to hold from buy, saying near-term expectations for the iPhone 16 and 17 are too high after weaker-than-expected initial demand.
• Amazon — Shares slumped nearly 2% after Wells Fargo downgraded the e-commerce company to equal weight from overweight, citing slowing growth and competition from Walmart.
• Pfizer — Activist investor Starboard Value took a roughly $1 billion stake, seeking a turnaround at the struggling company, sources told CNBC. Shares rose nearly 3% on the news.

Read the full list of stocks moving here.

— Hakyung Kim, Lisa Kailai Han

Oppenheimer maintains year-end S&P 500 target of 5,900

In a Monday note, Oppenheimer Asset Management reiterated its bullishness on equities and maintained its S&P 500 year-end target of 5,900.

This target is approximately 2.6% higher than where the broad market index closed at 5,751.07 on Friday.

"Pull-backs experienced thus far this year have mostly looked like 'trims' and 'haircuts' for the S&P 500 whenever bears, skeptics, and nervous investors have found a catalyst to take near-term profits without FOMO (fear of missing out) midst what appears to us like a very much intact bull market," wrote chief investment strategist John Stoltzfus. "Drivers of the bull market that in our view have provided resilience in the intermittent downdrafts that have occurred this year include: The success the Fed has had over the course of 20 FOMC meetings along with resilient earnings has provided support for the US economy and the markets thus far this year."

— Lisa Kailai Han

Goldman Sachs cuts 12-month recession odds to 15%

Given Friday's strong reading of the September jobs report, Goldman Sachs chief economist Jan Hatzius cut his 12-month U.S. recession probability back to his long-term average of 15%. He had previously raised this after the jump in unemployment rate from June to July.

"The most important reason is that the unemployment rate fell to 4.051% in September, marginally below both the June level and the threshold that activates the 'Sahm rule.' Moreover, with nonfarm payroll growth of 254k surprising sharply to the upside, prior months revised higher, and household employment also solid, we now estimate an underlying jobs trend of 196k, well above our pre-payrolls estimate of 140k and modestly above our estimated 'breakeven rate' of 150-180k," Hatzius wrote.

The economist added that fundamental upward pressure on the unemployment rate may have ended due to weaker labor supply growth and stronger labor demand growth.

— Lisa Kailai Han

Pfizer rises after Starboard Value takes $1 billion stake

Pfizer shares were up more than 3% in the premarket after sources told CNBC that activist Starboard Value has taken a $1 billion stake in the pharmaceutical giant.

— Fred Imbert

10-year Treasury yield tops 4%

Treasury yields continued rising Monday, with the benchmark 10-year rate topping 4% for the first time since August. The 10-year Treasury yield was last up nearly 3 basis points at about 4.01%. The 2-year note yield was also nearly 7 basis points higher at around 4%.

— Fred Imbert

Japan leads gains in Asia markets; Hong Kong set to close above 23,000 for first time since February 2022

Asia-Pacific markets mostly climbed on Monday, led by Japan's Nikkei 225 rising 1.8%, powered by financials and consumer cyclical stocks, and closed at 39,332.74.

Shares of video gaming company Nintendo climbed almost 5% on Monday, after Saudi Arabia's sovereign wealth fund was reported to be considering raising its stake in the company.

Hong Kong's Hang Seng index climbed 1.4% in its final hour of trade. The HSI briefly passed the 23,000 mark on Monday, and if it closes above that level it would be the first time since February 2022.

— Lim Hui Jie

Arcadium Lithium confirms approach from Rio Tinto about potential deal

Arcadium Lithium on Sunday evening confirmed that Rio Tinto has approached the company about a potential acquisition.

"The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed. Arcadium Lithium will not comment further unless and until there is news to share," the press release said.

Shares of Arcadium surged in after hours trading on Friday after Reuters reported that the two companies were talking about a potential deal.

— Jesse Pound

Key earnings reports later this week

Several major companies are set to report their quarterly earnings this week, including some financial giants. Here's a look at the earnings schedule for the coming days:

Tuesday: Pepsico

Thursday: Delta, Domino's Pizza

Friday: BlackRock, Bank of NY Mellon, JPMorgan Chase, Fastenal, Wells Fargo

— Jesse Pound

Stock futures open little changed

Stock futures were little changed when trading began at 6 p.m. in New York. The three major contracts were all within 0.1% of the flat line.

— Jesse Pound