U.S. stocks extended their pullback Tuesday, handing back more of a record-setting rally after bond markets reacted to high inflation and pushed Treasury yields higher. The S&P 500 dropped for a third straight session, falling 0.7% as the Dow slipped 0.6% and the Nasdaq composite fell 0.8%, according to AP reporting.
The move followed mixed trading overseas and came as investors focused on whether higher yields would further squeeze risk assets. In Asia, falling technology stocks dragged down South Korea’s Kospi by 3.3%, while Germany’s DAX rose 0.4%, AP reported, reflecting a global split in how markets were responding to the same drivers.
Within the broader decline, technology stocks weighed on sentiment after a run that had been driven by excitement around artificial intelligence and had left some critics arguing the stocks had become too expensive. As that mood shifted, markets also looked to energy prices, which have been swinging on uncertainty over how long the Iran war will keep the Strait of Hormuz closed for oil tankers.
That oil-market uncertainty, in turn, has contributed to higher yields in bond markets, AP said. The article linked those yield pressures to borrowing costs and investments across the economy, including the financing environment for growth tied to building AI data centers.
Investors were also watching individual company developments. Nvidia, a major component of the S&P 500, fell 0.8% Tuesday, and the stock remained in focus because the company is due to report its latest quarterly results Wednesday. AP noted that Nvidia has routinely topped analysts’ expectations each quarter and has issued forecasts that have consistently exceeded Wall Street projections, making its upcoming report a key test for tech shares.
Other Wall Street names moved in company-specific ways as well. Akamai Technologies dropped 6.3% after the cybersecurity and cloud computing company said it wants to raise $2.6 billion through a convertible note offering. Home Depot rose 0.9% after flipping an early loss; AP said the retailer’s latest earnings edged past analysts’ expectations, but an important measure tracking performance for stores more than 1 year old came in below some expectations.
In the bond market, Treasury yields climbed further, AP reported. The 10-year Treasury yield rose to 4.66% from 4.61% late Monday, and the article said that increase was notable because yields were less than 4% before the war with Iran began—part of a broader rise that has made stock prices look more expensive, raising concerns about economic slowdown.
Oil prices eased alongside those yield moves. AP reported that Brent crude slipped 0.7% to settle at $111.28, even as it remained well above its $70 level before the war with Iran, and it cited a rise in gasoline prices to an average of $4.53 per gallon overnight, according to AAA.
Barclays strategists described the market’s recent surge and the risk of a reversal. “Every flow has its ebb,” Rex Feng, Venu Krishna and other strategists at Barclays Capital wrote in a report, adding that they expected “the fastest rebound in decades; now the pendulum could swing backwards.”
Across global markets, AP reported that London’s FTSE 100 edged up 0.1% despite a drop for Standard Chartered, and it said the bank planned to reduce over 7,800 roles as it steps up artificial intelligence and automation uses.