The S&P 500 Index ($SPX) (NASDAQ: SPY) closed down -0.69% on Tuesday, while the Dow Jones Industrial Average (DIA) fell -0.22% and the Nasdaq 100 Index (QQQ) dropped -1.68%.
A broad rout in chipmakers and AI-infrastructure stocks drove the major indexes to their lowest levels in weeks, with the S&P 500 and Dow hitting 2-week lows and the Nasdaq 100 sliding to a 1.5-week low.
Rising crude oil prices intensified inflation concerns and pushed bond yields sharply higher across global markets, adding further pressure to equities.
WTI crude oil climbed to a 3-week high after a vessel heading out of the Strait of Hormuz was struck by an unknown projectile, rattling energy markets.
President Trump said he is not interested in extending the expired agreement with Iran, dimming prospects for a swift reopening of the Strait of Hormuz and keeping supply concerns elevated.
Trump also stated that the US naval blockade on Iranian ports is putting pressure on the country and that he has no timeline for resolving the US-Iran conflict.
Treasury Secretary Bessent said the administration will soon announce unprecedented economic measures against Iran “that have never been seen in the history of economic isolation of a country,” which would supplement the current naval blockade.
Surging oil prices pushed the 10-year T-note yield to a 1.5-year high of 4.75%, the 10-year German Bund yield to a 15-year high of 3.272%, and the 10-year Japan JGB yield to a 30-year high of 2.967%.
Stocks recovered partially from their session lows after bond yields retreated, with the 10-year T-note yield ultimately falling -2 basis points to finish at 4.70%.
The iShares Semiconductor ETF (SOXX) fell nearly -5% on the day, leading the broader tech selloff that swept through chip and AI-related names.
Sandisk (SNDK) and Seagate Technology Holdings (STX) each closed down more than -9%, while Marvell Technology (MRVL), Western Digital (WDC), and Micron Technology (MU) each shed more than -7%.
ARM Holdings (ARM) and Intel (INTC) each fell more than -6%, and Advanced Micro Devices (AMD), Lam Research (LRCX), and ASML Holding (ASML) each dropped more than -4%.
Software stocks offered a partial offset, with Intuit (INTU) climbing more than +4% to lead Nasdaq 100 gainers and Adobe Systems (ADBE) rising more than +3%.
Klarna Group (KLAR) was among the session’s biggest losers, plunging more than -22% after cutting its full-year revenue forecast to between $4.08 billion and $4.16 billion, well below a prior forecast of $4.34 billion.
Targa Resources (TRGP) surged more than +7% to lead S&P 500 gainers after announcing a 20-year, fee-based integrated midstream agreement with ExxonMobil.
Amylyx Pharmaceuticals (AMLX) soared more than +64% after reporting that its GLP-1 receptor met its primary endpoint in a late-stage trial for patients experiencing low blood sugar following bariatric surgery.
Meta Platforms (META) dropped more than -4% as the company faces a federal jury trial over claims it deliberately designed Facebook and Instagram to encourage compulsive use among young users.
On the housing front, July housing starts fell -12.4% month-over-month to 1.239 million, missing expectations of 1.345 million, though July building permits rose +5.0% to a 5-month high of 1.443 million.
The S&P 500 is tracking earnings growth of nearly 32% in Q2, well above the initial projection of +23%, with 85% of the 456 companies that have reported so far beating estimates, according to Bloomberg data.
Markets are currently pricing in a 35% probability of a 25-basis-point rate hike at the next FOMC meeting on September 15-16, reflecting persistent inflation concerns tied to Middle East tensions.
