US stocks experienced a broad decline on Tuesday, marking the third consecutive day of losses for major indexes. The S&P 500 fell 0.7% (54.67 points) to 7,631.47, the Dow Jones Industrial Average dropped 0.8% (419.02 points) to 52,766.88, and the Nasdaq composite slid 1% (271.11 points) to 26,099.77. This downturn was largely attributed to a combination of factors including a significant rise in oil prices following US military strikes on Iran and an ongoing sell-off in US government bonds.
Technology stocks were among the biggest contributors to the market's decline. Nvidia fell 1.5%, Amazon dropped 1.9%, and Advanced Micro Devices gave up 2.4%. These companies, with their large market capitalizations and reliance on borrowing for growth amid the artificial intelligence boom, are particularly sensitive to rising interest rates. The Dow Jones Transportation Average, often seen as an economic indicator, also slid 2.5%, further signaling a risk-off sentiment.
The bond market saw continued pressure, with the yield on the 10-year Treasury rising to 4.79% from 4.75% on Monday. This yield, which influences mortgage rates, had been as low as 4.20% at the beginning of 2026. This rise in bond yields, coupled with increasing oil prices, fueled expectations that the Federal Reserve might raise interest rates before the year's end to combat inflation, which is currently well above 3% and the Fed's 2% target. Investors are currently betting on a 66% chance of a rate hike at the upcoming September meeting.
Oil prices significantly impacted the market, with Brent crude, the international standard, rising 4.6% to settle at $94.65, and US oil climbing 5.2% to settle at $90.22 per barrel. This marks the first time US oil closed above $90 in over a month. The surge in oil prices, driven by escalating Middle East hostilities, has pushed up costs across various sectors, from gasoline to shipped goods, exacerbating inflationary pressures on households and businesses. Defensive health insurance stocks, such as Humana (up more than 3%) and CVS Health Corp (up more than 3%), were among the few gainers amidst the broader market slump.
