US stocks: Tech selloff weighs down Wall Street as bond yields climb
Wall Street faced a downturn as escalating tensions in the Middle East triggered a surge in bond yields. A steep decline was particularly evident in technology stocks, with semiconductors taking the brunt of the losses. Investors pivoted from growth-focused sectors to safer bets like healthcare. Additionally, oil prices rose amidst geopolitical instability and changes in military strategies.
On Tuesday, Wall Street experienced a drop as the decline in semiconductors fueled the decline of technology stocks, with Middle East instability driving bond yields to record highs and sparking concerns over borrowing costs and inflation. Oil prices surged due to fading hopes for Middle East peace, leading to a rise in U.S. 30-year Treasury bond yields to their highest levels since 2007.
The Philadelphia Semiconductor Index plummeted as investors shifted away from stocks that had previously benefited from booming AI-related demand. The S&P 500 lost 0.67% to close at 7,692.10 points, while the Nasdaq Composite fell 1.31% to 26,294.46, with the Dow Jones Industrial Average down 0.22% to 53,343.85. Among the S&P 500's 11 major sectors, technology suffered the most significant loss in index points, becoming the benchmark's biggest percentage loser.
Individual stocks like Nvidia, the leading AI chipmaker, and Micron Technology, a memory chip manufacturer, also took a hit after surging 18% in the previous five sessions. Data storage firms Sandisk and Western Digital faced heavy losses, along with the Roundhill Memory ETF, which plummeted after five consecutive days of gains.
The fear gauge for Wall Street rose to its highest level since August 5, reflecting investors' apprehension about Federal Reserve policy's impact on growth and inflation. As investors moved away from high-growth sectors, they turned to defensive sectors such as healthcare and consumer staples. The S&P 500 energy sector gained support from rising oil prices, outperforming the broader market.
By late afternoon, U.S. crude oil futures saw most of their gains erased but still rose 0.5%, after Iran threatened to take a fully offensive military stance and the U.S. ruled out extending a ceasefire deal. Investors awaited the results from other retailers, including Walmart, while the Federal Reserve's minutes from their July meeting, set for release on Wednesday, may provide additional insight into the central bank's assessment of the current environment. Nvidia's upcoming quarterly report is expected to be a crucial test for the AI-driven momentum.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
