U.S. stocks opened lower on Tuesday, with the technology-heavy Nasdaq Composite leading the decline. A prolonged selloff in government bonds, particularly at the long end of the Treasury market, weighed on investor sentiment as rising oil prices revived concerns about inflation.
At 09:31 ET (13:31 GMT), the S&P 500 fell 0.4% to 7,711.46 points. The Nasdaq Composite dropped 1% to 26,369.25, while the Dow Jones Industrial Average declined 0.3% to 53,326.22.
Wall Street Extends Recent Losses
The weakness followed another negative session on Wall Street.
On Monday, the Dow Jones fell 0.5%, the Nasdaq lost 0.3%, and the S&P 500 declined 0.5%. That marked the S&P 500’s worst trading day of August so far.
However, losses were partially offset by strength in semiconductor stocks.
Chipmakers received support from reports surrounding artificial intelligence company Anthropic and Nvidia’s investment plans for a data center in Ohio, which were reportedly smaller than previously expected.
U.S.-Iran Standoff Pressures Market Sentiment
Geopolitical uncertainty also remained a major concern for investors.
Deutsche Bank analysts said there was no single factor behind the market decline. However, the continued lack of progress toward a U.S.-Iran agreement increased expectations that the Strait of Hormuz could remain disrupted for longer.
Iran has reportedly indicated that it plans to adopt a more aggressive military posture as negotiations with Washington remain deadlocked.
At the same time, U.S. President Donald Trump has warned of possible military action against Oman if the country interferes with Washington’s efforts to reach an agreement with Tehran.
The developments have increased uncertainty surrounding the Strait of Hormuz, one of the world’s most important routes for global oil shipments.
Oil Above $90 Fuels Inflation Concerns
Brent crude prices advanced on Monday and remained above $90 per barrel on Tuesday.
Higher oil prices have intensified worries that energy costs could trigger another increase in inflation.
These concerns have also contributed to rising U.S. Treasury yields.
The 30-year Treasury yield climbed to its highest level in nearly two decades, increasing borrowing costs across the economy and placing additional pressure on growth-sensitive technology stocks.
Higher bond yields tend to weigh particularly heavily on technology companies because their valuations are often based on profits expected further into the future.
Fed Rate Hike Concerns Return
Investors are also considering the possibility that persistent inflation pressures could influence future Federal Reserve policy.
A prolonged surge in oil prices could make it more difficult for the Fed to ease monetary policy and may even revive discussion of additional interest rate increases.
Minutes from the Federal Reserve’s latest policy meeting are scheduled for release on Wednesday.
The central bank kept its benchmark interest rate unchanged at 3.50% to 3.75% during its July 28-29 meeting.
However, the decision revealed disagreement among policymakers, with three officials voting in favor of a rate increase.
Investors will closely examine the minutes for clues about how concerned Fed officials are about inflation and whether higher energy prices could influence future policy decisions.
Home Depot Earnings Beat Expectations
Corporate earnings also remained in focus.
Home Depot reported second-quarter revenue and profit that exceeded Wall Street forecasts, supported by resilient demand for smaller home repair and improvement projects.
The results came despite continued weakness in the U.S. housing market and broader economic uncertainty.
Home Depot shares moved higher following the report.
Walmart, Target and Lowe’s Earnings in Focus
Investors are now preparing for additional earnings reports from major U.S. retailers.
Walmart, Target and Lowe’s are among the companies scheduled to release results this week.
Their reports could provide valuable insight into the strength of U.S. consumer spending.
That will be particularly important after July retail sales and employment figures came in weaker than expected.
For now, Wall Street remains caught between slowing economic indicators and renewed inflation risks from higher energy prices. Rising Treasury yields, uncertainty surrounding the Middle East and upcoming Federal Reserve guidance could continue to drive volatility across the S&P 500, Nasdaq and Dow.
