Wall Street ended lower on Monday as a fresh climb in Treasury yields and a spike in oil prices revived worries about inflation and further interest-rate rises. The losses spread across Asia on Tuesday.
The S&P 500 fell 0.77% to 7,683.69, its biggest one-day decline since 20 August. The Nasdaq Composite dropped 0.92% to 26,820.38, and the Dow Jones Industrial Average lost 0.67% to 51,481.51, a fall of more than 300 points. The Cboe Volatility Index, often described as Wall Street’s fear gauge, jumped almost 10% to 16.35.
Bonds and oil set the tone
Stocks opened weakly after President Donald Trump rejected an Iranian proposal on the Strait of Hormuz. Crude oil surged at the open, at one point adding more than $4 a barrel, and government bond yields followed. The 10-year Treasury yield rose to about 5.26%, close to its highest since 2007, while the 30-year yield also reached multi-year peaks.
Higher yields hit equities in two ways. They make safer bonds more competitive with shares, and they reduce the present value of future company profits, which tends to weigh most heavily on growth stocks. Traders now put the odds of another Federal Reserve rate increase in October at roughly 70%.
Tech under pressure, with one exception
Technology shares were not spared. The Philadelphia Semiconductor Index fell 1.4% to 12,491.17, and Meta Platforms and Tesla each dropped roughly 4% to 5%.
Nvidia bucked the trend. The chipmaker announced a $150 billion increase to its share-repurchase authorization, the largest such increase on record, lifting the total remaining to $235 billion. The company expects to use it through fiscal 2028. Shares rose 1.68% after gaining more than 2% earlier in the session. An authorization sets a ceiling and is not a commitment to spend the full amount immediately, but the scale signalled confidence in the company’s cash generation.
Late in the day, AMD announced it would buy AI research firm World Labs for $8.2 billion in stock. Its shares were little changed after hours.
Asia follows Wall Street lower
Japan’s Nikkei 225 fell by more than 1% on Tuesday, and the broader Topix dropped 1.67%. South Korea’s Kospi and Hong Kong’s Hang Seng also lost ground.
In India, the Sensex lost 1,124.02 points, or 1.52%, on Monday to close at 72,771.72, while the Nifty 50 finished at 22,824.50. Foreign institutional investors sold shares worth about Rs 5,353 crore that day. Indian benchmarks opened lower again on Tuesday, with declining stocks outnumbering advancers by roughly two to one on the National Stock Exchange in early trade.
Australia’s central bank added to the sense of global tightening by lifting its cash rate by 25 basis points to 4.60% on Tuesday, its fourth increase this year, citing energy-driven inflation pressures.
What investors are weighing
The main concern is that the two forces driving markets, oil and bond yields, are reinforcing each other. Oil affects inflation expectations, inflation expectations affect central-bank policy, and policy drives yields. Until the Middle East standoff eases or economic data soften, that loop is likely to keep stocks sensitive to every headline.
There are reasons not to overstate the alarm. The volatility index, at just over 16, remains far below the levels that accompany genuine market stress. One reading is that investors are repricing interest rates rather than doubting corporate earnings. Futures were little changed on Monday night, suggesting traders were looking for a pause after the sell-off.
Data and events ahead
Tuesday’s US calendar includes September consumer confidence and August job-openings figures, both due at 10am Eastern time. A strong labour market would reinforce the case for another Fed hike. Softer numbers might ease some of the pressure on yields.
Investors will also follow OpenAI’s developer conference in San Francisco later in the day, which has become a barometer for sentiment toward artificial-intelligence stocks after a week of heavy news flow in the sector.
This article is for information only and does not constitute investment advice.
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