U.S. stocks opened September under pressure as oil prices and Treasury yields jumped, dragging the Nasdaq composite down 1.4% in early trading. Bank of America says the S&P 500's rally stays intact only above 7,500, while markets price in a possible Federal Reserve rate hike this month.
The Dow Jones Industrial Average fell 0.6% just after Tuesday's open. The S&P 500 dropped 0.7% over the same stretch. The tech-heavy Nasdaq composite sold off 1.4% in morning trading.
Ahead of the bell, futures pointed to the same pressure. Nasdaq-100 contracts lost more than 1%. Dow futures shed more than 300 points. S&P 500 futures slid 0.6%.
Oil and yields drive the selloff
West Texas Intermediate crude futures jumped nearly 3%, to around $88.15 a barrel. The 10-year Treasury yield rose near 4.77%. That marks its highest level since January 2025. Bitcoin fell to roughly $77,600 amid the broader risk-off move. Technology shares led Tuesday's retreat.
Chipmakers slide, Dow movers diverge
Nvidia shares declined more than 1% premarket, threatening to erase Monday's gain, while Micron stock dropped more than 2% as it tries to reclaim its 50-day moving average. Among Nasdaq-100 names, Diamondback Energy and Gilead Sciences each rallied roughly 1%, while Nebius and CoreWeave sold off more than 3% each.
Inside the Dow, Chevron rallied 1.5%, while Caterpillar and Amazon declined 1.5% and nearly 2%, respectively.
Fed rate-hike odds at 66%
Markets are pricing in a possible rate hike this month, according to the CME Group's FedWatch tool. The tool shows a 66% chance the central bank raises its overnight rate by a quarter percentage point, to a range of 3.75% to 4.00%, at its meeting later this month.
Bank of America strategist Paul Ciana said Fed Chair Kevin Warsh's first Jackson Hole address pushed back against expectations for an easier policy path, delivering a hawkish message. According to Bank of America: "macro headwinds are building".
He said the S&P 500's August breakout holds as long as the index stays above 7,500. The index closed Monday at 7,686.14, well above that threshold. It hit an intraday record of 7,816.70 on August 13.
Not everyone shares the caution. JPMorgan's Mislav Matejka doesn't expect rising yields to derail stocks, and Wells Fargo's Ohsung Kwon said his positioning isn't negative despite staying cautious on equities.
Dell Technologies and Palo Alto Networks report earnings after Tuesday's close, giving investors another read on the AI trade.
Sources: Investor's Business Daily, CNBC, Yahoo Finance
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