U.S. stocks dip as bond yields rise and oil prices climb
Wall Street indices fell on Tuesday amid higher Treasury yields and a jump in Brent crude, while investors anticipate further Federal Reserve rate hikes.
U.S. equity markets slipped on Tuesday, with the S&P 500 down 0.4%, the Dow Jones Industrial Average losing 190 points (0.4%), and the Nasdaq Composite falling 0.5% as of midday Eastern time. The declines came as Treasury yields rose and oil prices increased.
The 10-year Treasury yield rose to 4.77% from 4.75% the previous day, while the two-year yield climbed to 4.37% from 4.34%. Higher yields, which move inversely to bond prices, reflect investors’ demand for greater compensation amid concerns over growing government debt, which recently topped $40 trillion.
Technology shares led the losses, with Microsoft down 1.3% and Advanced Micro Devices down 2.4%. Analysts noted that the sector’s growth, driven in part by artificial-intelligence investments, is sensitive to borrowing costs that rise when interest rates increase.
Brent crude rose 2.3% to $92.61 per barrel, adding pressure to inflation expectations. The price increase follows disruptions in the Strait of Hormuz, a key oil-shipping route.
Investors are pricing in a roughly 66% probability that the Federal Reserve will raise its policy rate at the September meeting, according to CME FedWatch. The central bank continues to target a 2% inflation rate, with upcoming data on price trends and the labor market expected to shape its decision.
European markets fell, while Asian markets posted mixed results.