The S&P 500 (-0.4%) and Nasdaq Composite (-0.2%) took a modest step back from Friday's record highs as renewed hostilities between the U.S. and Iran prompted a spike in oil prices, weighing on stocks. There was some early enthusiasm across select tech and mega-cap names, which saw the two indices trade higher for most of the morning before mounting pressure forced them lower.

Meanwhile, the DJIA (-1.1%) spent the entire session below its flatline.

Stocks moved lower in broad fashion just before midday in response to headlines that the UAE intercepted a wave of missiles from Iran. More reports of Iranian cruise missile attacks against U.S. military ships in the region followed, with the U.S. Central Command saying they sank several Iranian boats in response. The escalation in hostilities throws an already tenuous ceasefire further into question, weighing on stocks and U.S. Treasuries as oil prices spiked.

Crude oil futures settled today's session $4.44 higher (+4.4%) at $106.28 per barrel. As a result, the energy sector (+0.6%) was the only S&P 500 sector to escape with a gain.

There was, however, some resilience across the top-weighted information technology sector (-0.2%), with its rebound from session lows helping limit losses at the index level. Several prominent chipmaker names, such as Advanced Micro Devices (AMD 341.54, -19.00, -5.27%) and Intel (INTC 95.78, -3.84, -3.85%), moved lower, pressuring the PHLX Semiconductor Index (-0.6%). Meanwhile, memory names, such as Micron (MU 576.45, +34.24, +6.31%) and Sandisk (SNDK 1256.01, +69.01, +5.81%), extended their impressive post-earnings run.

Software names also posted a strong showing, with Oracle (ORCL 180.36, +8.53, +4.96%) surging higher and Palantir Technologies (PLTR 146.03, +1.96, +1.36%) notching a solid gain ahead of its earnings after the close. The iShares GS Software ETF finished 2.1% higher.

The consumer discretionary sector (-0.2%) was another relative outperformer, despite just three of its components finishing higher. Amazon (AMZN 272.07, +3.81, +1.42%) and Tesla's (TSLA 392.56, +1.74, +0.45%) mega-cap leadership nearly offset the broader weakness, with Amazon trading higher after announcing the launch of Amazon Supply Chain Services, which will allow the company to offer the entire shipping process for other businesses, not just its own packages.

The announcement weighed heavily on courier names such as UPS (UPS 96.31, -11.26, -10.47%), C.H. Robinson (CHRW 161.24, -16.06, -9.06%), and FedEx (FDX 357.80, -35.87, -9.11%), which were among the worst-performing S&P 500 components. The industrials sector (-1.2%) lagged as a result.

Elsewhere in the consumer discretionary sector, eBay (EBAY 109.33, +5.26, +5.05%)  moved higher after GameStop (GME 23.84, -2.69, -10.14%) made an unsolicited $56 billion cash and stock bid for the company, while Norwegian Cruise Line (NCLH 17.20, -1.61, -8.56%) moved lower after missing revenue estimates and issuing disappointing guidance.

Tyson Foods (TSN 68.75, +5.07, +7.96%) was a standout after topping earnings estimates, but the stock's gain did little to help broader weakness in the consumer staples (-0.7%) sector.

The materials sector (-1.6%) finished with the widest loss, as the surge in oil prices weighed on construction names such as CRH Plc. (CRH 110.80, -4.65, -4.03%) and Vulcan Materials (VMC 287.72, -9.60, -3.23%).

On a related note, the iShares U.S. Home Construction ETF finished 3.8% lower.

Overall, today's session highlighted that "higher for longer" oil prices stemming from the U.S.-Iran conflict remain a headwind for risk assets in the near term. However, today's pullback was modest in the context of the market's recent strength, with the S&P 500 and Nasdaq Composite still near record highs following a five-week winning streak. Recent sessions have shown a tendency for investors to largely look past geopolitical headlines, with strong earnings growth providing a notable tailwind. That dynamic will be tested again this week, as another busy slate of earnings reports is set to drive market direction.

U.S. Treasuries started the week with a daylong slide that sent yields on 10s and 30s to their highest closing levels since mid-July while yields on shorter tenors settled near their highs from March. The 2-year note yield settled up seven basis points to 3.96%, the 10-year note yield settled up seven basis points to 4.45%, and the 30-year note yield settled up six basis points to 5.03%.

• Russell 2000: +12.7% YTD
• S&P Mid Cap 400: +9.4% YTD
• Nasdaq Composite: +7.9% YTD
• S&P 500: +5.2% YTD
• DJIA: +1.8% YTD

Reviewing today's data:

• March Factory Orders 1.5% (Briefing.com consensus 0.5%); Prior was revised to 0.3% from 0.0%
  • The key takeaway from the report is that factory order activity ramped up in March, driven by widespread strength that was punctuated by a big increase (3.4%) in new orders for nondefense capital goods excluding aircraft.