US stocks today: US stocks end lower as oil, yields crank up pressure ahead of Fed rate move

US stocks fell on Tuesday as another jump in oil prices and a sharp rise in Treasury yields intensified pressure on investors, with markets already bracing for the Federal Reserve’s expected interest-rate hike, AP reported.

The S&P 500 fell 0.4%, while the Dow Jones Industrial Average dropped 0.6% and the Nasdaq Composite declined 0.8%. The moves came as the yield on the 10-year Treasury climbed to 5.01%, up from 4.97% late Monday, after briefly touching 5.04% overnight.

Rising yields raise the pressure

The 10-year Treasury yield is closely watched because higher borrowing costs can weigh on households, businesses and the government. At the same time, higher bond yields can make stocks look less attractive, as investors can earn more from relatively safer government debt.


“The result is a market that must work harder to generate earnings growth just as investors become less willing to pay premium valuations for that growth,” said Darrell Cronk, president of Wells Fargo Investment Institute, according to AP.

The 10-year yield has been climbing towards levels last seen years ago. It briefly crossed 5% on Monday for the first time since 2023, adding to concerns over inflation, the US government's debt burden and the outlook for economic growth.

The rise in yields has accelerated since February, when the war with Iran pushed oil prices sharply higher. That has raised concerns that inflation could remain elevated for longer, complicating the outlook for monetary policy.

Oil keeps inflation worries alive

Oil added to the pressure on Tuesday after a volatile morning. Brent crude, the international benchmark, rose 3.5% to $109.35 a barrel, remaining far above its roughly $72 level in early July and before the war with Iran began in February.

Investors remain concerned about whether the conflict will allow oil tankers to move freely through the Strait of Hormuz, a key route for global energy supplies.

The oil surge comes just as markets expect the Federal Reserve to raise the federal funds rate on Wednesday for the first time in three years. While traders still see a small possibility that the Fed could hold rates steady, any surprise decision could trigger a sharp market reaction.

Fed officials are also due to release their forecasts for interest rates in the coming years, potentially giving investors more clues about how policymakers view inflation and future rate moves, AP reported.

Consumer-focused stocks were among the biggest losers as higher costs and tighter financial conditions raised concerns about household spending. Chipotle Mexican Grill fell 6.3%, while United Airlines lost 2.2%. Dollar Tree dropped 4.2%, and Dave & Buster’s Entertainment tumbled 19.7% after reporting weaker-than-expected quarterly results.

Some AI stocks were steadier after a global selloff the previous day. Nvidia rose 0.5%, while Advanced Micro Devices gained 2.2%. AI shares have driven US stocks to records in recent years but have faced renewed scrutiny over stretched valuations and calls from industry leaders for a slower pace of development over safety concerns, AP reported.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)