US equity indexes fell as crude oil surged after midday on Monday amid reports of a meeting being scheduled between Iran and Russia to assess the burgeoning Middle East crisis.

The Nasdaq Composite fell 0.4% to 18,064.2 with the S&P 500 down 0.4% to 5,730.8 and the Dow Jones Industrial Average dropping 0.5% to 42,138.7. Utilities paced the decliners with only energy and technology posting advances.

West Texas Intermediate crude oil surged 3.6% to $77.07 a barrel on the one-year anniversary of the terrorist attack on Israel by the Hamas militant group that took place on Oct. 7 last year.

"Iran's missile attack on Israel last week has raised expectations for a retaliatory strike that would likely serve the purpose of weakening Iran's economy through various forms of attack, whether direct or indirect," Ole Hansen, head of commodity strategy at Saxo Bank, said. "Crude oil jumped the most last week since January 2023 for fear that an attack on Iran's oil and gas industry may lead to tight supply and potentially widen the conflict."

Russian President Vladimir Putin will meet Iranian President Masoud Pezeshkian on Friday to hold talks regarding the Middle East, CNN reported Russia's state-run media agency TASS as saying. Israel is coordinating with the US as it prepares to strike back at Iran but will make its own decisions, Israeli Defense Minister Yoav Gallant told CNN. "Everything is on the table," said Gallant, plans to meet with US Defense Secretary Lloyd Austin.

The CBOE Volatility Index, also known as the fear gauge for investors, jumped 10% to 21.14.

US Treasury yields rose intraday with the 10-year yield up 4.1 basis points to 4.02%, and the two-year rate climbed 4.9 basis points to 3.98%. The gains follow Friday's blockbuster nonfarm payrolls report for September signaling the labor market is probably running stronger than anticipated by the Federal Reserve in its monetary policy communications last month.

The labor force flow data suggest the unemployment rate will average 4.17% in Q4, less than the Fed's forecast for an end-of-year jobless rate of 4.4%, according to an analysis by Oxford Economics.

"This reinforces our baseline view that the central bank will embrace a measured pace of rate cuts," wrote Bernard Yaros, Lead US Economist at Oxford Economics. The post-pandemic surge in immigration has led to stronger-than-anticipated trend employment growth, he added.

In company news, Supermicro (SMCI) shares soared 14%, the top gainer on the S&P and the Nasdaq. The company shipped more than 100,000 graphics processing units in a single quarter while saying it introduced a complete liquid cooling system for data centers that includes cooling towers and management software to support a reduction in power and hardware acquisition costs.

Barnes Group (B) agreed to be acquired by funds managed by affiliates of Apollo Global Management (APO) in a deal that values the industrial company at $3.6 billion.

Gold slipped less than 0.1% to $2,665.01 an ounce, and silver dropped 1.1% to $32.06.