U.S. equities retreated on Tuesday as rising long-term Treasury yields weighed on the technology sector, with the Nasdaq 100 falling 1.68% to 29,490.96, extending losses from the prior session. The Dow Jones Industrial Average declined 0.22% to 53,343.40, while the S&P 500 dropped 0.69% to 7,691.76.
Higher yields on long-dated bonds, nearing multi-year highs, combined with elevated oil prices amid ongoing tensions in the Middle East to dampen appetite for risk assets. U.S. President Donald Trump stated on Truth Social that no negotiations are underway with Iran, escalating geopolitical concerns. "The situation in the Middle East is clearly escalating again, and long-term interest rates are rising — factors that ultimately undermine the value of equities," said Emma Moriarty, portfolio manager at CG Asset Management.
Artificial intelligence-linked stocks, which had surged on Monday, faced profit-taking pressure as rising yields eroded their valuation appeal. Nvidia shares fell 2.3%, while Micron, SanDisk, and Marvell Technology each declined between 7% and 9%. The Philadelphia Semiconductor Index, a benchmark for chipmakers, dropped 5%.
Meta’s stock led declines among the Magnificent 7, falling 4.5% after a court case accused the company of exploiting children via social media. Meanwhile, Caterpillar’s shares slipped 4.6% as the construction equipment maker’s exposure to data center energy infrastructure amplified its sensitivity to AI-related investment trends.
Baidu’s U.S.-listed shares plunged 12.7% after reporting a weaker-than-expected second-quarter profit, driven by soft online advertising revenue. The decline underscored investor caution toward Chinese tech firms amid mixed earnings signals.
In corporate developments, UGI shares surged 9.4% after The Wall Street Journal reported KKR had made a $9 billion takeover offer for the natural gas and power utility provider.
Analysts at Commerzbank noted that while the broader uptrend in U.S. equities remains intact, its continuation hinges on sustained earnings growth, stable interest rates, and the durability of AI investment momentum. Risks identified include geopolitical escalation, elevated energy costs, inflation, and potential disappointment in AI revenue prospects.
