Higher US Treasury bond yields drove Wall Street stocks lower and the dollar higher on Monday while European equities advanced.
Global markets fixated on the yield 10-year US Treasury bond, which edged ever closer to 3.0 percent.
Higher yields are a signal interest rates could be on the rise. And higher rates are seen as potentially dangerous to markets because they would make debt payments more expensive and could steer funds away from stocks and into bonds.
"Every bond trader around the world is watching the US 10-year yield because it has been four years since we saw it at this level," said Tom Cahill, portfolio strategist at Ventura Wealth Management.
"This rise suggests that the (Federal Reserve) could be more aggressive than we could imagine," he said. "It could pressure corporate borrowing costs and consumer prices."
Both the Dow and Nasdaq finished lower, while the S&P 500 was essentially unchanged.
Analysts are gearing up for a deluge of major earnings reports. This week's calendar includes Google-parent Alphabet -- which after Monday's close reported quarterly profit soared to $9.4 billion -- as well as Boeing, ExxonMobil and Coca-Cola.
Shares of Halliburton and Hasbro rose Monday after reports, while Kimberly-Clark retreated.
Major economic releases include an estimate of first-quarter US growth and April consumer confidence.
Higher bond yields weighed on US stocks, but lifted the dollar against the euro and other currencies.
"The rally in US yields has been building for a week as hawkish rhetoric from Fed officials kept the pressure on rates," said Boris Schlossberg, managing director at BK Asset Management.
"The Fed is clearly now the most aggressive central bank in the G-11 universe as it tries to normalize monetary policy after years of QE and the market has finally taken notice of the widening interest rate differentials."
The pullback in the euro and pound gave a bounce to European markets, with Frankfurt, Paris and London all rising modestly.
In other markets, aluminum prices fell sharply after US officials said they could lift sanctions on Russian aluminum giant Rusal if Kremlin-tied oligarch Oleg Deripaska gave up control of the company. Alcoa dropped 13.5 percent.
- Key figures around 2100 GMT -
New York - Dow: DOWN 0.1 percent at 24,448.69 (close)
New York - S&P 500: FLAT at 2,670.29 (close)
New York - Nasdaq: DOWN 0.3 percent at 7,128.60 (close)
London - FTSE 100: UP 0.4 percent at 7,398.87 (close)
Frankfurt - DAX 30: UP 0.3 percent at 12,572.39 (close)
Paris - CAC 40: UP 0.5 percent at 5,438.55 (close)
EURO STOXX 50: UP 0.6 percent at 3,514.65 (close)
Tokyo - Nikkei 225: DOWN 0.3 percent at 22,088.04 (close)
Hong Kong - Hang Seng: DOWN 0.5 percent at 30,254.40 (close)
Shanghai - Composite: DOWN 0.1 percent at 3,068.01 (close)
Euro/dollar: DOWN at $1.2207 from $1.2288 at 2100 GMT on Friday
Dollar/yen: UP at 108.72 yen from 107.66
Pound/dollar: DOWN at $1.3941 from $1.4000
Oil - Brent North Sea: UP 65 cents at $74.71 per barrel
Oil - West Texas Intermediate: UP 24 cents at $68.64 per barrel