U.S. equities opened sharply lower on Tuesday, with technology shares bearing the brunt of a renewed surge in long-term bond yields. The Nasdaq Composite slid 1.4% in early trading, more than double the decline of the S&P 500, as investors reassessed the impact of rising rates on growth-oriented valuations.
The 10-year Treasury yield climbed to 4.79%, up from 4.73% at Friday's close, marking its highest level since January 2025. Higher yields reduce the present value of future earnings, a dynamic that disproportionately affects expensive technology stocks compared with sectors that generate more immediate cash flows or are less sensitive to interest rate shifts.
At 09:33 EDT, the S&P 500 was down 0.7%, while the Dow Jones Industrial Average had lost 299 points, or 0.6%. The Nasdaq's steeper slide underscores how the current oil-driven inflation shock is amplifying pressure on long-duration growth equities.
Oil Prices Extend Gains on Supply Risks
Oil markets remained elevated, with Brent crude adding 1.7% to reach $92 per barrel, while U.S. crude gained 2.2% to $87.67. Supply concerns are centered on the Strait of Hormuz, through which approximately 20.9 million barrels per day passed during the first half of 2025, representing about a quarter of global seaborne oil trade, according to the U.S. Energy Information Administration.
The persistent risk premium in oil prices is feeding into broader inflation expectations, which in turn supports higher bond yields. This combination is particularly challenging for equity markets, as it squeezes both corporate profit margins and valuation multiples.
Market Breadth and Volume
Tuesday's losses followed a sluggish start to the week. The S&P 500 closed August at 7,686.14, down 0.33%, while the Nasdaq settled at 26,370.89. The Dow finished 0.70% lower on Monday, according to Yahoo Finance data.
Market breadth was notably negative. On the New York Stock Exchange, decliners outnumbered advancers by a ratio of 1.95-to-1, and on the Nasdaq market the ratio was 1.58-to-1. Only 6 of 11 S&P sectors were trading lower, but technology's weight amplified the overall index decline.
Total U.S. share volume reached 15.65 billion shares on Monday, slightly above the 20-session average of 15.58 billion, indicating heightened activity as investors repositioned.
Economic Data in Focus
Investors were awaiting the release of the Institute for Supply Management's August manufacturing figures, scheduled for 10:00 EDT. A stronger-than-expected reading could push yields even higher, while a softer number might alleviate some rate pressure, though weaker demand could pose separate risks to corporate earnings.
The bond market's recent selloff has been sharp, and some analysts see potential for a rebound if yields attract buyers. However, as long as oil prices remain elevated and the Federal Reserve maintains its tightening bias, the pressure on equities is likely to persist.
The Nasdaq's underperformance remains the clearest signal that the inflation shock is affecting equity duration, with technology and other high-growth sectors most exposed to rising discount rates.
