U.S. equities retreated Tuesday morning, with the technology-heavy Nasdaq Composite leading the decline as a surge in Treasury yields and firm oil prices dampened risk appetite. The sell-off pulled major indices back from recent highs, reversing some of the gains fueled by artificial intelligence optimism.
The S&P 500 fell 0.69% to 7,352.22, while the Nasdaq Composite slipped 1.05% to 25,815.56, according to LSEG data. The Dow Jones Industrial Average showed relative resilience, dipping just 0.25% to 49,564.06. Declining issues outpaced advancers by nearly 3-to-1 on the New York Stock Exchange and by 2.31-to-1 on the Nasdaq, indicating broad-based weakness.
Bond Yields and Oil in Focus
The U.S. 10-year Treasury yield hovered near 4.61%, after touching 4.663% earlier in the session—a level not seen since January 2025. The move higher came amid a global bond sell-off and renewed inflation concerns tied to geopolitical tensions in the Middle East, which have kept oil prices elevated. Brent crude traded at $110.67 per barrel.
“The macro backdrop remains unideal for equities,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. She noted that investors have already priced in strong earnings expectations, and markets are again factoring in geopolitical and economic risks, which has particularly weighed on technology shares.
Sector and Stock Movers
Materials was the hardest-hit sector, falling 2.3%, followed by consumer discretionary names, which also pressured the S&P 500. Despite the broad sell-off, some software stocks bucked the trend. Workday, Intuit, and ServiceNow all traded higher. However, Akamai Technologies dropped after announcing plans to issue $2.6 billion in convertible bonds, which can be exchanged for stock under certain conditions.
Home Depot reported mixed first-quarter results. Sales rose 4.8% to $41.8 billion, with comparable-store sales up 0.6%. Net earnings fell to $3.3 billion. CEO Ted Decker said demand was in line with last year but highlighted “greater consumer uncertainty and housing affordability pressure.” The company maintained its 2026 outlook.
Key Events on the Horizon
Investor attention is firmly fixed on Wednesday, when Nvidia is set to report earnings after the closing bell. Analysts expect revenue to jump nearly 80% to just under $79 billion, according to LSEG data. Nvidia’s results are closely watched as a bellwether for the AI trade, with its supply chain linked to major cloud customers Microsoft, Amazon, and Alphabet. Their capital spending on data centers ties the AI narrative directly to the bond market squeeze and tech stock valuations.
Also on Wednesday, the Federal Reserve will release the minutes from its April 28-29 policy meeting. The central bank typically publishes full minutes three weeks after its decision, and investors will scrutinize them for any shifts in the Fed’s thinking on inflation and interest rates.
Outlook
The rising yield environment is prompting caution among bulls. “The 10-year yield could go to 4.75%,” warned Padhraic Garvey, strategist at ING. Jim Barnes of Bryn Mawr Trust described the current climate as a “different interest rate environment,” suggesting that higher yields could force growth stocks into another round of valuation adjustments, even if earnings remain solid.
As markets navigate this confluence of higher yields, elevated oil prices, and key earnings and central bank events, the near-term path for equities appears increasingly dependent on how these macro forces unfold.
