U.S. Stocks Slide as Bond Yields Surge and Chip Stocks Retreat

CNBC reported Tuesday that U.S. equities extended their losing streak as surging Treasury yields rattled investors across technology and consumer sectors.

The S&P 500 declined 0.9% and the Nasdaq Composite lost 1.4%. Both indexes were on course for a third consecutive down session. The Dow Jones Industrial Average dropped roughly 184 points, or 0.4%.

Bond Yields Rattle the Bull Market

The bond yields stock market relationship turned hostile Tuesday. The 30-year Treasury yield climbed above 5.18%, its highest mark in nearly 19 years. Analysts pointed to a run of inflation data last week as the primary catalyst. The ongoing conflict in Iran has pushed oil prices higher, feeding back into broader price pressures. Elevated borrowing costs on mortgages and credit cards could soon weigh on consumer spending. Sky-high valuations in technology, particularly semiconductors, also look more exposed in a high-rate environment.

Market strategist Ed Yardeni of Yardeni Research argued that bond vigilantes are effectively signaling the Federal Reserve is falling behind on inflation. Yardeni called for a July rate hike, though he acknowledged that move would likely add further pressure on equities. Incoming Fed Chair Kevin Warsh is set to be sworn in by the end of this week.

Also Read: What Bond Vigilantes Mean for Your Portfolio

Chips Take the Hardest Hit

The Philadelphia Semiconductor Index fell 1.4% on Tuesday and has now shed more than 7% across three sessions. Profit-taking and doubts about the long-term pace of data center investment have driven the pullback. Nvidia, which reports fiscal first-quarter earnings after Wednesday’s close, slid 0.5% for its third straight decline. Qualcomm dropped more than 3%, and Broadcom retreated 1.8%.

Jed Ellerbroek, portfolio manager at Argent Capital Management, told CNBC the move was a healthy pause. He described it as a “well deserved breather after an epic rally,” noting the timing was notable given Nvidia’s imminent earnings report.

Also Read: Nvidia Earnings Preview: What Analysts Expect

Context: Records Were Just Set Last Week

The pullback follows a strong stretch for markets. The S&P 500 and Nasdaq each posted fresh record highs last week. The Dow Jones briefly recaptured the 50,000 level during that run. Crude oil provided one modest relief valve Tuesday. President Donald Trump called off a planned strike on Iran after regional leaders urged restraint, sending West Texas Intermediate futures down 0.4% to around $103.81 per barrel. Brent crude fell 1% to roughly $110.96.

Read Next: Fed Policy Outlook as Warsh Prepares to Take Over