U.S. equity benchmarks finished lower on Monday, with selling that intensified through the afternoon as climbing oil prices and rising Treasury yields weighed on sentiment. The pullback came on the heels of a record-setting week for the S&P 500, a level that left the market primed for some profit-taking.

Closing levels:

• Dow industrial average: -272.03 points (-0.51%) at 53,465.36
• S&P 500: -40.37 points (-0.52%) at 7,745.38
• Nasdaq Composite: -84.25 points (-0.32%) at 26,644.91
• Nasdaq 100: -50.76 points (-0.17%) at 29,995.38
• Russell 2000: -10.87 points (-0.35%) at 3,057.53

The S&P 500 and Dow lagged the other major averages, while the Nasdaq 100 held up comparatively well.

Crude oil was a key driver of the weakness. WTI rose more than 2% as concerns surrounding the Strait of Hormuz and stalled U.S.-Iran negotiations kept supply risks at the forefront. The strait is one of the world's most critical oil chokepoints, with roughly a fifth of globally traded petroleum passing through it, so any threat to free passage there carries outsized implications for world supply. The advance boosted energy shares but also revived worries about inflation and interest rates, since costlier crude tends to feed through to fuel and transportation costs. The S&P energy component gained 0.87%, making it the only S&P sector to finish higher on the day. On the downside, communication services fell 1.47%, consumer staples dropped 1.46%, and financials lost 1.04%.

Chip and AI names dominated the winner's list, with Sandisk extending the rally that began at its investor day last Thursday. The stock added another 8.88% on Monday and is now up 35% since that day:

• Sandisk (SNDK): +8.88%
• Credo Technology (CRDO): +8.87%
• Coherent (COHR): +7.79%
• Applied Materials (AMAT): +5.55%
• Marvell Technology (MRVL): +5.54%
• Lumentum (LITE): +4.62%
• Micron (MU): +4.13%
• Lam Research (LRCX): +3.45%
• SK Hynix (SKHY): +3.04%
• ASML (ASML): +2.12%

Treasuries also moved higher, adding a further layer of pressure on equities. The 10-year yield rose to 4.72%, up 3.1 basis points, while the 30-year yield climbed to 5.31%, up 4.8 basis points, its highest level since June 2007, putting long-term borrowing costs at levels last seen before the 2008 global financial crisis. Rising yields matter for stocks because they increase financing costs for companies and households while making bonds relatively more attractive than equities, a dynamic that historically weighs on stock valuations. Higher oil prices, together with stronger New York manufacturing data released during the session, contributed to the upward pressure on yields.

Focus now shifts to the consumer, with a busy week of retail earnings ahead. Home Depot, Walmart, Target and Lowe's are among the major companies set to report, giving investors a fresh look at consumer spending after Friday's weaker-than-expected U.S. retail sales report. Consumer spending accounts for the bulk of U.S. economic activity, making these results a widely watched gauge of household resilience. Traders will also parse the minutes from the Federal Reserve's July meeting when they are released on Wednesday for further insight into how officials assessed the inflation and growth picture.

For now, Monday's decline marks another step back from last week's record territory. Rising oil prices and climbing Treasury yields remain the principal headwinds, while strength in AI and semiconductor shares helped limit the losses in the Nasdaq.