Key facts
- U.S. stock indexes closed lower on Tuesday, with technology and semiconductors leading the decline.
- Rising bond yields reached multiyear peaks due to Middle East uncertainty and inflation concerns.
- The Philadelphia SE Semiconductor Index fell 5%, and major indexes like the S&P 500 and Nasdaq Composite experienced significant percentage declines.
- Investors shifted from growth stocks to defensive sectors such as healthcare and consumer staples.
- The energy sector was the biggest gainer, supported by rising oil prices.
Wall Street's main indexes closed lower on Tuesday, with technology and semiconductor stocks leading the decline as rising bond yields and Middle East uncertainty fueled investor concerns about borrowing costs and inflation. The Philadelphia SE Semiconductor Index tumbled 5%, marking a significant drag on the Nasdaq Composite and S&P 500.
Investors fled stocks that had previously rallied on AI-related demand, seeking refuge in more defensive sectors like healthcare and consumer staples. The S&P 500 lost 0.69%, the Nasdaq Composite shed 1.33%, and the Dow Jones Industrial Average fell 0.22%.
Rising oil prices, partly due to Iran's threats and Washington's stance on a ceasefire deal, contributed to the climb in U.S. 30-year Treasury yields to their highest levels since 2007, and 10-year yields to their highest since January 2025. This environment of increasing borrowing costs is seen as particularly detrimental to technology companies, which rely on future growth expectations.
Chip companies, including Nvidia and Micron Technology, were among the biggest individual stock drags. The energy sector, however, was the benchmark's biggest gainer, adding 1.8% as U.S. crude oil futures settled up 0.5%.
Investors are now awaiting the Federal Reserve's July meeting minutes for further insights into the central bank's assessment of the economic environment and upcoming retail results from companies like Walmart.