Wall Street closed lower on Tuesday, dragged down by tech and industrial stocks. Investor sentiment weakened as Middle East uncertainty drove bond yields to multiyear highs, raising concerns over inflation and borrowing costs. All three benchmark indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) lost 116.38 points, or 0.2%, to close at 53,343.4. Nineteen components of the 30-stock index ended in the positive territory, while 11 ended in the negative.
The tech-heavy Nasdaq Composite fell 355.2 points, or 1.3%, to close at 26,289.71.
The S&P 500 slid 53.3 points, or 0.7%, to close at 7,691.76. Seven of the 11 broad sectors of the benchmark index closed in the red. The Technology Select Sector SPDR (XLK), the Industrials Select Sector SPDR (XLI) and the Materials Select Sector SPDR (XLB) declined 1.9%, 1.5% and 0.9%, respectively, while the Energy Select Sector SPDR (XLE) advanced 1.8%.
The fear gauge CBOE Volatility Index (VIX) increased 4.3% to 15.84. A total of 14.86 billion shares were traded on Tuesday, lower than the last 20-session average of 16.88 billion. Decliners outnumbered advancers by a 1.94-to-1 ratio on the NYSE and by a 1.67-to-1 ratio on the Nasdaq.
Oil Continues to Climb as Middle East Tensions Persist
Oil prices settled at their highest levels in more than three weeks on Tuesday as Iran adopted a more offensive stance and said the Strait of Hormuz would remain closed. The United States ruled out extending a ceasefire, adding to supply concerns. Brent crude gained 0.17% to $91.02 a barrel, while WTI crude rose 0.52% to $84.94, with both closing at their highest since July 24.
Investor Sentiment Weakens as Bond Yields Rise
Investor sentiment turned cautious on Wall Street on Tuesday as heightened uncertainty surrounding the Middle East pushed Treasury yields to multiyear highs. The 30-year yield touched roughly 5.33%, its highest level since 2007, before easing slightly to around 5.29% by the close. The benchmark 10-year Treasury yield hovered near 4.73%. The rise in borrowing costs renewed concerns that elevated energy prices and geopolitical risks could fuel inflation, potentially complicating the outlook for monetary policy.
Higher yields also made equities less attractive relative to fixed-income investments, adding pressure to risk appetite. Technology and semiconductor stocks bore much of the selling pressure, as investors remained particularly sensitive to higher financing costs and stretched valuations. The PHLX Semiconductor Index plunged about 5.6%, with all 30 components declining. The cautious mood reflected growing concerns that persistent inflationary pressures and geopolitical uncertainty could weigh on economic growth and corporate earnings. As a result, Wall Street’s main indexes ended lower, extending a more defensive tone across the broader market.
Consequently, Sandisk Corporation SNDK and NVIDIA Corporation NVDA lost 9% and 2.3%, respectively. While SNDK boasts a Zacks Rank #1 (Strong Buy), NVDA carries a #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Economic Data
Per the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, Housing starts for July came in at 1,239,000. The number for June was revised down to 1,415,000 from the previously reported 1,427,000. The July number for Building Permits came in at 1,443,000, while the June number was revised up to 1,374,000 from the previously reported 1,367,000.
Per a Fed report, Industrial Production increased 0.2% in July. The number for June was revised up to 0.3% from the previously reported 0.1%. Capacity Utilization increased to 76.3 after rising to 76.2 in June.
Per the National Association of Realtors, Pending Home Sales fell 2.3% in July. The number for June was revised to a fall of 4.8% from the previously reported 5.4%.
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