US stocks opened lower on Tuesday, with the Dow Jones Industrial Average falling 153 points, as rising oil prices and elevated Treasury yields weighed on investor sentiment. The S&P 500 slipped 0.56%, while the Nasdaq Composite dropped 1.24%, led by declines in technology and semiconductor shares.
Oil climbs as US-Iran talks stall
Crude prices extended gains after hopes for a lasting peace agreement between Washington and Tehran faded. US crude rose 0.93% to trade near $85 a barrel, while Brent futures gained 0.46%, hovering around three-week highs. The advance follows a rise in the previous session, adding to concerns that higher energy costs could keep inflation pressures persistent.
According to a senior Iranian official cited by Reuters, Iran could shift to a "fully offensive" military posture if negotiations with the US fail. Washington has also ruled out extending a temporary ceasefire that expired on August 17. The renewed uncertainty has heightened worries about energy supplies and contributed to the upward move in Treasury yields.
Investors are also monitoring comments from President Donald Trump, who said Monday that the US would attack Oman if it interfered with its objectives. The developments come as markets remain sensitive to the relationship between energy prices and inflation, particularly as traders assess the Federal Reserve's next policy moves.
Treasury yields pressure growth stocks
The yield on the 30-year Treasury bond rose more than one basis point to 5.323%, reaching levels not seen since 2007. The 10-year Treasury yield also remained near its highest level since January 2025. Higher yields can weigh on growth stocks by increasing borrowing costs and reducing the present value of future earnings, making technology shares particularly vulnerable.
Tesla and Nvidia each fell more than 1%, while semiconductor companies including Micron Technology, Marvell Technology, Advanced Micro Devices, and Intel declined between 3% and 5%. Storage names SanDisk, Western Digital, and Seagate Technology dropped more than 5% each. The CBOE Volatility Index rose to its highest level in roughly two weeks, signaling increased investor caution.
The pressure on tech stocks comes after strong earnings across several sectors, including AI-related companies, helped lift the S&P 500 and Dow to record highs earlier this month. Nvidia's upcoming earnings report next week could provide another test for investor confidence in the AI trade. For more on the recent slide in AI chip stocks, see this analysis.
Money-market data showed traders still saw a 96% probability of a 25-basis-point rate hike this year, although expectations for a September increase declined following softer inflation data last week. Investors will look to the minutes from the Federal Reserve's July meeting, due Wednesday, for further clues on monetary policy. The recent surge in long-duration yields has also pressured long-duration Treasury ETFs, which are near record lows.
As the 30-year yield hits levels not seen in nearly two decades, the impact is being felt across asset classes, including housing and growth stocks. For a broader perspective, see how the yield spike is affecting markets. Meanwhile, the ongoing geopolitical tensions and oil price surge have already contributed to a 272-point slide on Wall Street in a previous session.
This article is for informational purposes only and does not constitute financial advice.
