The Nasdaq fell Tuesday as an escalating Middle East conflict pushed Treasury yields toward multi-year highs and hit chip stocks hard. The Dow and S&P 500 also declined, while oil rose and gold slipped.
The Nasdaq Composite fell 1.05% on Tuesday, with the Dow Jones Industrial Average dipping 0.12% and the S&P 500 down 0.50%. IBD's live market coverage tracked a sharper move earlier in the session, with the Nasdaq Composite relinquishing 1.3% and the Nasdaq-100 dropping 1.6%.
Chip stocks lead the retreat
According to IBD, the VanEck Semiconductor ETF tanked more than 4%, with Credo Technology sinking nearly 13%, Micron giving back around 6% and Sandisk losing roughly 7%. The Russell 2000 gave back 1% as small caps also felt pain.
Elevated Treasury yields tend to weigh on equities by raising borrowing costs for capital-intensive companies pouring money into AI infrastructure. According to Reuters: Kim Forrest, chief investment officer at Bokeh Capital Partners, said "It makes for a nervous investor environment."
Treasury yields near multi-year highs
The 30-year Treasury yield touched 5.3371%, the highest since 2007, before easing to 5.2868%. The 10-year note yield reached 4.7478%, its highest since January 2025, before settling at 4.708%.
Prospects for a U.S.-Iranian peace deal dimmed after Tehran said it would adopt a more offensive stance and Washington ruled out extending a ceasefire deal. U.S. crude rose 0.82% to $85.17 a barrel, while Brent crude rose 0.55% to $91.37 a barrel.
Fed minutes and Jackson Hole ahead
Traders now see just a 35% chance of a Fed rate hike at the September meeting but 68% odds of an increase by December, even as a resurgence in inflation could renew expectations for a faster pace of hikes. Investors are turning their attention to Wednesday's release of the Fed's policy meeting minutes and next week's Jackson Hole symposium for clues on policymakers' thinking.
Spot gold fell 1.11% to $4,366 an ounce, while the dollar index rose 0.06% to 99.60.
Sources: Reuters, Investor's Business Daily
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