US stocks declined on Tuesday, with technology shares leading the losses. Elevated bond yields and rising oil prices prompted investors to scale back riskier bets, including positions tied to artificial intelligence.
The tech-heavy Nasdaq 100 Index fell 1.7%, while the S&P 500 dropped 0.7%, marking a third consecutive day of declines for both benchmarks. Brent crude gave back some of its earlier intraday gains, trading near $91 per barrel.
Long-term Treasury yields remained close to multi-decade highs, fueled by concerns over increased fiscal spending, persistent inflation, and heavy debt issuance. This backdrop pushed investors away from growth stocks. Meanwhile, geopolitical tensions in the Middle East showed no signs of easing after President Donald Trump indicated no intention to extend the US-Iran memorandum of understanding.
AI-related equities led the losses. The Philadelphia Semiconductor Index, which tracks chipmakers, dropped 5%, with Nvidia and Intel falling 2.3% and 6.6%, respectively.
Matt Maley, chief market strategist at Miller Tabak + Co, attributed the renewed weakness in tech shares to rising long-term interest rates. "If historical patterns still hold, it's only a matter of time before higher long-term yields create clear headwinds for the equity market," he said.
Despite the broader market's downturn, the S&P 500 Energy Index climbed 1.8% to a record high, supported by geopolitical risk premiums.
Investors may gain more insight into policymakers' thinking with Wednesday's release of the Federal Reserve meeting minutes, particularly as Fed Chair Warsh has reduced public communications. A slate of consumer company earnings will also draw attention, with Home Depot's results, reported Tuesday, coming in better than expected.
At the close, the S&P 500 fell 0.7% to 7,691.76 points; the Dow Jones Industrial Average declined 0.2% to 53,343.4 points; the Nasdaq Composite slid 1.3% to 26,289.71 points; the Nasdaq 100 lost 1.7% to 29,490.96 points; and the Russell 2000 dropped 1.3% to 3,017.887 points.
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