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The S&P 500 fell on Tuesday as rising bond yields and oil prices reduced demand for technology stocks. Semiconductor shares led the losses, while energy and defensive sectors attracted buyers.
The S&P 500 dropped about 0.5% during early trading. The NASDAQ Composite lost roughly 1.2%, while the Dow traded near flat before moving lower.
Technology shares placed the most pressure on the S&P 500 and NASDAQ. The S&P 500 Information Technology sector fell 1.5% during morning trading.
NVIDIA declined 2%, while Meta Platforms dropped 3%. Western Digital and Seagate Technology fell more than 5% each. Marvell Technology and Sandisk lost over 6%.
The Philadelphia Semiconductor Index fell 3.7% and reached its lowest level in one week. Micron Technology and SK Hynix also declined more than 4% before the opening bell.
High bond yields can reduce the present value of expected company earnings. They also raise financing costs for technology companies spending heavily on artificial intelligence infrastructure.
The 30-year Treasury yield climbed above 5.3% and reached its highest intraday level since 2007. Meanwhile, the 10-year Treasury yield rose to about 4.74%.
Government bond yields also increased outside the United States. Japan’s 10-year yield reached a 30-year high. Germany’s 30-year yield climbed to its highest level since 2011.
France’s 30-year government bond yield also reached its highest point since 2008. Investors monitored government borrowing, fiscal spending, inflation risks, and growing debt demand from AI companies.
Kim Forrest, chief investment officer at Bokeh Capital Partners, said, “The yields are troubling people because it portends a tighter environment.” She added that higher rates make borrowing more expensive.
Peter Boockvar of One Point BFG Wealth Partners questioned how long stocks could ignore the bond selloff. He said, “It’s just a matter of when, not if,” markets respond if yields keep rising.
Oil prices rose as negotiations between the United States and Iran stalled. Brent crude traded near $91 per barrel, its highest level in roughly three weeks.
West Texas Intermediate crude climbed above $84 per barrel. Some market reports placed the US benchmark above $85 during Tuesday’s session.
President Donald Trump said the United States had no current talks or scheduled conversations with Iran. He added that the US naval blockade remained active.
Iran said it could adopt a fully offensive military position after diplomatic efforts stalled. Washington also declined to extend a temporary ceasefire that expired on August 17.
Higher oil prices added to inflation concerns and supported energy shares. The S&P 500 Energy sector gained 1.4%, contrasting with losses across technology and semiconductor companies.
Investors moved toward healthcare and consumer staples stocks during the market decline. These sectors often attract demand when volatility increases and growth shares weaken.
The CBOE Volatility Index climbed to its highest level in about two weeks. Declining stocks outnumbered advancing shares on both the New York Stock Exchange and NASDAQ.
At 11:00 a.m. Eastern Time, the Dow had fallen 47 points to 53,400. The S&P 500 lost 35.37 points, while the NASDAQ dropped 360 points.
Home Depot traded unevenly after reporting second-quarter sales above analysts’ estimates. The company recorded stronger demand for smaller home improvement projects during the summer.
Markets are also awaiting NVIDIA’s quarterly report next week. Investors will examine whether revenue growth supports the large spending commitments tied to artificial intelligence development.
Federal Reserve meeting minutes are due Wednesday. Traders will review the release for details about inflation, interest rates, and the central bank’s assessment of financial conditions.
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