Tech selloff drags Wall Street as bond yields climb
Wall Street's main indexes closed lower on Tuesday with semiconductors leading technology declines as Middle East uncertainty pushed bond yields to multi-year peaks, feeding concerns about borrowing costs and inflation. Fading hopes for Middle East peace pushed oil prices higher, which in turn triggered an increase in US 30-year Treasury bond yields to their highest levels since 2007. The 10-year…
On Tuesday, Wall Street suffered a major selloff with tech stocks leading losses, as geopolitical tensions and surging bond yields weighed on investors' sentiment. The Middle East crisis contributed to the decline, while soaring bond yields hit borrowing costs and inflation concerns. As hopes for Middle East peace faded, oil prices rose, prompting a spike in 30-year Treasury bond yields to their highest point since 2007. The 10-year bond yields hit their highest level since January 2025.
The Philadelphia Semiconductor Index plummeted 5%, reflecting the heavy weight technology shares carried in the market. Investors quickly moved away from stocks that had benefited from AI-related demand, fearing that higher borrowing costs would dampen their growth potential. Burns McKinney, a portfolio manager at NFJ Investment Group, noted that bond yields' rise disproportionately affected technology stocks.
The S&P 500 lost 53 points, or 0.7%, to 7,691, while the Nasdaq Composite dropped 355 points, or 1.3%, to 26,289, marking their biggest daily percentage decline since July 29. The Dow Jones Industrial Average fell 116 points, or 0.2%, to 53,343. Among the S&P 500's 11 major sectors, information technology suffered the most significant index-point drag, plummeting 1.9%.
Individual stocks like chipmakers Nvidia and Micron Technology also took a hit, with Nvidia down 2.3% and Micron Technology falling 7% after a recent 18% surge.
Other hard-hit sectors included data storage firms Sandisk and Western Digital, which each lost 9% and 7.4%, respectively. The Roundhill Memory ETF tumbled 8.8% after five consecutive gains. Investors sought refuge in defensive sectors, such as healthcare, which gained 1.6%, and consumer staples, which rose by 1.1%. Wall Street's fear gauge rose to 15.84, its highest close since August 4.
The S&P 500 energy sector gained 1.8% due to elevated oil prices. Late in the day, US crude oil futures still held onto most of their gains but settled up 0.5%, after Iran threatened a full-scale military response and the US ruled out extending a ceasefire deal.
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