US Stocks: US market hits two-week lows as Iran tensions lift oil, bond yields

US stocks’ major indexes slipped to roughly two-week lows on Tuesday as heavyweight technology shares declined even as diminishing prospects for a US-Iran peace agreement stoked oil prices and kept government bond yields near multi-year highs, Reuters reported.

According to the report, Iran said it would adopt a "fully offensive" military posture after efforts to negotiate a permanent end to the war with the U.S. stalled. Meanwhile, Washington ruled out extending a temporary ceasefire agreement that expired on August 17.

The lack of movement towards a deal raised Brent crude oil futures by 0.5% to around three-week high while the S&P 500 Energy sector advanced 1.4%.


The 30-year Treasury bond yield was at its highest level since 2007, while the benchmark 10-year yield remained close to its highest since January 2025.

"The yields are troubling people because it portends a tighter environment and it's going to be more expensive to borrow money," Kim Forrest, chief investment officer at Bokeh Capital Partners, told Reuters.

"Especially in this whole AI thing where the time to pay it back is uncertain. It makes for a nervous investor environment."

Most megacap and growth shares moved lower because elevated government bond yields can reduce the present value of future technology profits and raise corporate borrowing costs.

Nvidia fell 2% while Meta Platforms declined 3%. The S&P 500 Information Technology sector dropped 1.5%, one of the top losing sectors on the benchmark index.

Chipmakers also faced selling pressure, with the Philadelphia SE Semiconductor index sliding 3.7% to its lowest level in one week.

Amid the volatility, investors moved into healthcare and consumer staples shares, which are traditionally regarded as defensive investments.

The CBOE Volatility Index, commonly known as Wall Street’s "fear gauge", climbed to its highest level in about two weeks.

Meanwhile, the Dow Jones Industrial Average was down 132.55 points, or 0.25%, at 53,327.23. The S&P 500 declined 35.37 points, or 0.46%, to 7,709.69, while the Nasdaq Composite fell 275.95 points, or 1.04%, to 26,368.96.

Home-enhancer retailer Home Depot was little changed in choppy trading despite beating second-quarter sales estimates.

Better than expected results from several companies, including some AI hyperscalers, had lifted the S&P 500 and the Dow to record highs earlier this month. Investors now view AI bellwether Nvidia’s quarterly report, due in the upcoming week, as the next test of AI-fueled momentum.

US technology shares have been quite choppy in recent months as investors continue to question whether substantial spending on AI is delivering adequate returns.

The benchmark S&P 500 ended the previous session lower, retreating from record levels as rising crude oil prices renewed concerns about inflation.

Money-market data indicated that traders continued to price in a 96% probability of a 25-basis-point rate hike this year, although expectations for an increase as early as September eased after benign inflation data last week.

Minutes from the Federal Reserve’s July meeting, scheduled for release on Wednesday, could provide further insight into the central bank’s assessment of the current environment.

Declining stocks outnumbered advancing ones by a 1.21-to-1 ratio on the NYSE and a 1.6-to-1 ratio on the Nasdaq, while the S&P 500 registered six new 52-week highs and one new low, and the Nasdaq Composite posted 17 new highs and 39 new lows.

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