By Shashwat Chauhan and Purvi Agarwal
Aug 18 (Reuters) – Futures tied to the S&P 500 and Nasdaq slipped on Tuesday, with oil holding near recent highs and government bond yields hitting multi-year peaks as chances of a peace deal between the U.S. and Iran waned, rekindling inflation concerns.
Iran would shift to a “fully offensive” military posture because efforts to negotiate a permanent end to the war with the U.S. have stalled, a senior Iranian official told Reuters. Washington, too, has ruled out extending a temporary ceasefire agreement that expired on August 17.
The developments pushed Brent crude futures up 0.4% at around three-week highs.
The yield on the 30-year Treasury bond stood at its highest since 2007, while that on the benchmark 10-year maturity held near its highest level since January 2025.
Heavyweight technology stocks came under pressure as high government bond yields potentially lower the present value of future tech profits and increase corporate borrowing costs.
Tesla and Nvidia led losses among growth stocks, down 1.4% and 2%, respectively, in premarket trading.
Semiconductor and chip-related companies also retreated. Micron Technology, Marvell Technology, Advanced Micro Devices and Intel slid between 2% and 5%.
Data storage companies Sandisk and Western Digital dipped about 6% each and were among the biggest decliners.
The CBOE Volatility Index, commonly dubbed as Wall Street’s “fear gauge”, jumped to its highest in about two weeks.
Home Depot gained 2.3% after the home-improvement retailer beat Wall Street estimates for second-quarter sales, keeping Dow futures flat. Retail bellwether Walmart is set to report on Thursday.
At 06:40 a.m. ET, Dow E-minis were up 18 points, or 0.03%, S&P 500 E-minis were down 36.75 points, or 0.47% and Nasdaq 100 E-minis were down 362.75 points, or 1.21%.
“Despite the angst about the path ahead for the Fed, whether a durable ceasefire can be achieved in the Middle East, or even where rising bond yields may peak, a focus on earnings growth should remain the key driver of equity returns,” said Michael Lok, group CIO and co-CEO of asset management at UBP.
Strong earnings across several sectors, including some AI hyperscalers, had lifted the S&P 500 and the blue-chip Dow to all-time highs earlier this month. The next test for the AI trade could be Nvidia’s earnings, due next week.
U.S. technology stocks have seen immense volatility in the past few months as investors remain nervous about whether hefty AI spending is paying off or not.
The benchmark S&P 500 closed lower in the previous session, backing away from record highs as higher crude oil prices revived inflation worries.
Money-market data showed traders still see a 96% chance of a 25-basis-points rate hike this year, though odds of an increase as soon as September have come down following tame inflation data last week.
Minutes from the Federal Reserve’s July meeting, due on Wednesday, could offer more clues about how the central bank is assessing the current environment.
(Reporting by Shashwat Chauhan and Purvi Agarwal in Bengaluru; Editing by Shilpi Majumdar)
Comments