US stocks gave back more of their record-setting run Tuesday as bond markets reacted to inflation concerns and pushed Treasury yields higher, a move that investors said can make equities look more expensive. The S&P 500 fell 0.7% for its third straight loss since setting its latest all-time high, while the Dow slid 322 points, or 0.6%, and the Nasdaq composite dropped 0.8% as technology shares retreated. MSI previously reported that earlier oil-and-yield moves had started pulling the market away from records.
Bond-market pressure extended beyond the US. Stock markets abroad showed mixed trading, with South Korea’s Kospi down 3.3% after technology stocks faltered there, while Germany’s DAX rose 0.4%. In Asia, the pullback followed a period of strong gains tied to enthusiasm around artificial intelligence, which some critics said had driven some technology stocks to expensive levels.
Oil prices also remained a factor, with prices easing in their latest yo-yo move after uncertainty over the Iran war. The AP report said the uncertainty includes how long the war will keep the Strait of Hormuz closed for oil tankers, a condition that has fed volatility in energy markets.
As yields climbed, analysts warned that tighter rate expectations can ripple through the economy and investment decisions. The yield on the 10-year Treasury rose to 4.61% on the day, up from 4.61% late Monday per AP’s comparison, and the rise was described as part of a broader worldwide climb in rates that threatens to slow growth.
Higher yields can also push up borrowing costs. The AP report said the increases can drive up rates for mortgages and loans used to finance areas such as AI data centers, which have contributed to economic growth.
Even with oil prices down in Tuesday’s session, energy costs were still elevated. Brent crude settled 0.7% lower at $111.28, but the report noted that the price remains well above its pre-Iran-war level of $70. Gasoline prices also rose further overnight to an average of $4.53 a gallon, according to AAA, which the report said is about 43% higher than the same time last year.
Nvidia, one of the biggest weights in the S&P 500, sank 0.8% Tuesday and drew attention ahead of its results. Nvidia is due to report quarterly results Wednesday, and AP reported that the company has routinely surpassed analysts’ expectations in past quarters while also issuing forecasts for future growth that have topped Wall Street’s.
The technology slowdown put more pressure on a few other large-cap names 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, with the company’s latest earnings report nudging profit and revenue slightly past analysts’ expectations.
Home Depot CEO Ted Decker said the retailer saw customer demand similar to last year “despite greater consumer uncertainty and housing affordability pressure,” according to AP. The report said many large US companies have delivered stronger-than-expected profits for the latest quarter, supported in part by customers continuing to spend despite high gasoline prices and other challenges, a pattern that helped push US indexes to records—before the bond-market disquiet raised new concerns.
Elsewhere, London’s FTSE 100 edged up 0.1%. The AP report highlighted Standard Chartered’s plan to reduce over 7,800 roles as it steps up AI and automation uses—another example of companies citing artificial intelligence as they cut jobs.
As of Tuesday’s close, the S&P 500 fell 49.44 points to 7,353.61, the Dow Jones Industrial Average dropped 322.24 to 49,363.88, and the Nasdaq composite sank 220.02 to 25,870.71. AP Business Writers Yuri Kageyama, Matt Ott and Chan Ho-him contributed to the report.