U.S. technology shares retreated on Tuesday as rising long-term Treasury yields and climbing oil prices weighed on investor sentiment, with the Nasdaq 100 falling 1.63% to 29,507 points by the close.
The Philadelphia Semiconductor Index led declines among major benchmarks, dropping 5.5% as chipmakers including Nvidia, Micron, Sandisk, Marvell Technology and Applied Materials each shed between 2% and 10%. The broad S&P 500 declined 0.57% to 7,701, while the Dow Jones Industrial Average slipped 0.17% to 53,370.
Caterpillar’s shares fell nearly 5%, marking the Dow’s weakest performer, as the industrial equipment maker’s exposure to data center infrastructure and power engineering weighed on its valuation. Home Depot bucked the trend with modest gains after reporting second-quarter results that exceeded expectations.
Fabrinet plunged more than 20% after the process engineering firm posted disappointing Datacom revenue, while UGI surged 11.5% following a Wall Street Journal report that private equity firm KKR had made a $9 billion takeover bid for the natural gas and electricity utility.
Baidu’s U.S.-listed shares tumbled 13% after the Chinese AI and internet company reported a sharp decline in second-quarter profit, driven by weaker online advertising revenues.
Analysts cited rising geopolitical tensions in the Middle East and multi-year highs in long-term bond yields as key headwinds for equities, alongside elevated oil prices linked to the ongoing conflict in Iran. Emma Moriarty, portfolio manager at CG Asset Management, noted that escalating Middle East risks and higher long-term rates were undermining equity valuations.
Andreas Wex, strategist at Commerzbank, said the broader U.S. stock market uptrend remained intact but warned that its continuation hinged on sustained profit growth, continued AI investment momentum, and a stable interest rate environment. Current risks include rising rates, geopolitical escalation, elevated energy prices, and potential disappointment in AI-driven earnings rather than an imminent recession.
