U.S. equity markets opened sharply lower on Tuesday, with technology shares bearing the brunt of selling pressure as a fresh oil shock and elevated bond yields rattled investor sentiment. The Nasdaq Composite pared its early losses but still traded down 1.1% by 10:00 a.m. EDT, hovering near 26,078. The S&P 500 slipped 0.6%, while the Dow Jones Industrial Average fell 0.5%.
West Texas Intermediate crude climbed 3% to $88.35 a barrel, while Brent advanced to $92.74, after reports of renewed clashes between the U.S. and Iran raised concerns about potential disruptions to shipping through the Strait of Hormuz. The 10-year Treasury yield remained elevated at 4.78%, close to Monday's close, adding pressure on growth stocks as higher discount rates reduce the present value of future earnings.
Trading volumes surged in the early session, with the Invesco QQQ Trust (QQQ) seeing 6.49 million shares change hands in the first half-hour, up 62% from the same period on Monday. The SPDR S&P 500 ETF (SPY) also saw volume rise 9.3%, indicating heightened participation as investors reacted to the geopolitical headlines.
Sector performance was mixed, with energy, consumer staples, and healthcare posting gains, while technology, consumer discretionary, and materials lagged. The Technology Select Sector SPDR Fund (XLK) dropped 1.7%, and the Consumer Discretionary Select Sector SPDR Fund (XLY) fell 1.4%. In contrast, the Consumer Staples Select Sector SPDR Fund (XLP) rose 0.9%, and the Energy Select Sector SPDR Fund (XLE) gained 0.8%.
Major tech names weighed heavily on the Nasdaq. Nvidia (NVDA) fell 1.7%, and Micron Technology (MU) declined 2.1% in early trading. Meanwhile, energy giants Exxon Mobil (XOM) and Chevron (CVX) advanced 1.5% and 1.4%, respectively, benefiting from the surge in crude prices.
In individual movers, AEye (LIDR) jumped 26% to $1.45 after the lidar company announced a multi-million-dollar contract with Lunar Outpost for its Pegasus lunar vehicle. The news drove heavy volume, with over 80 million shares traded.
Economic data released at 10:00 a.m. showed U.S. job openings at 7.271 million in July, roughly flat from the prior month, with June's figure revised lower to 7.182 million. The data offered little direction for markets, as investors remained focused on oil and yields.
Analysts at William Blair noted that the balance of risks still points to yields remaining elevated, which could continue to pressure high-valuation technology stocks. However, a reversal in oil prices could ease some of the selling pressure and allow the early rebound to extend.
As the session progresses, traders will watch for any further geopolitical developments and their impact on crude prices, as well as any shifts in Treasury yields that could influence the direction of the broader market.
