US stock futures pointed to a sharply lower open on Tuesday, with the Nasdaq leading declines as a renewed bond-market sell-off and elevated oil prices revived inflation concerns that had recently appeared to be cooling.
Nasdaq 100 futures were down about 1.2% in early trading, while S&P 500 futures lost 0.55% and Dow futures slipped 0.15%. The moves came as the 30-year Treasury yield climbed to its highest level since 2007, reaching 5.327%, and the benchmark 10-year yield rose to 4.739%.
Tech and semiconductor shares bear the brunt
The pressure was concentrated in the most rate-sensitive corners of the market. Nvidia and Tesla each fell more than 1% in premarket trading, while Micron, Marvell, AMD, and Intel dropped between 2.6% and 4.8%. SanDisk and Western Digital lost more than 5%.
Higher bond yields are particularly uncomfortable for growth companies because they reduce the present value investors assign to future profits, while also increasing financing costs for the massive AI infrastructure build-out. The sell-off extends beyond expectations for Federal Reserve policy, according to OCBC strategist Vasu Menon, who pointed to heavy borrowing by AI hyperscalers, rising US deficits, and greater policy uncertainty as factors pushing longer-term yields higher.
Oil above $91 complicates the inflation picture
Oil is the biggest macro complication. Brent crude moved above $91 after a temporary US-Iran ceasefire expired without a permanent agreement. Tehran signaled a more aggressive military posture, and Washington ruled out extending the arrangement. Disruption around the Strait of Hormuz remains a key supply concern.
If crude stays above $90, the resulting pressure on fuel and transport costs could make recent improvements in US inflation harder to sustain. This dynamic is particularly relevant as markets await the Fed's July meeting minutes on Wednesday and Chair Kevin Warsh's Jackson Hole appearance next week.
Home Depot beats estimates in an early consumer test
Home Depot delivered a brighter signal before the bell. Second-quarter sales rose to $47.86 billion, above the roughly $47.27 billion expected, while adjusted earnings reached $4.92 a share versus the $4.73 consensus. US comparable sales increased 1.3%, helped by demand for smaller repair projects. The retailer maintained its annual outlook despite the difficult housing market.
Walmart reports Thursday, providing the next major read on household spending. The mixed signals from Home Depot and the broader market come as investors weigh softer economic data against rising long-term borrowing costs.
Fed minutes and Nvidia earnings loom
Markets have reduced expectations for a September Fed increase after softer inflation and retail data, although futures still imply a very high probability of at least one quarter-point hike before year-end. The bond-market move is effectively tightening financial conditions even without another immediate Fed increase.
Nvidia also reports next week, giving the AI trade another test as rising yields challenge the valuations that helped drive stocks to records earlier this month. For more on the recent market dynamics, see Wall Street's slide on Iran tensions and the AI rally's impact on the Dow.
This article is for informational purposes only and does not constitute financial advice.
